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YOGA Share Trading CD FACTORS AFFECTING REAL ESTATE INVESTMENTS  

REAL ESTATE INVESTMENT

Presented by M/s Mega Enterprises -Real Estate Consultancy Division

INDEX

1.   Factors affecting Real Estate Investments

2.    FAQs

3.  Laws governing Real Estate

4.  Indian Real Estate Trends 2008

5.   Land records in Karnataka on Web

6.   Agreement to sell

7.   How to buy Agriculture Land

8.   For Non-Resident Indians

9. Taxation and Real Estate Investment

10. Rent Control Acts in India

11. Stamp and Registration

12. Society Laws

13. Details of Home Loans

14. Tips on Leasing Property

15. Sample Drafts / Forms

16. Financial and Property Calculators

17. Fast and Vast prosperity of Property in MYSORE

18. The top Indian Cities

I.FACTORS AFFECTING REAL ESTATE INVESTMENTS

Real estate sector in India is on upturn. Research estimates that Indian Real Estate market is expected to grow from the current USD 14 billion to a USD 102 billion in the next 10 years. The main growth thrust is coming due to favourable demographics, increasing purchasing power, existence of customer friendly banks & housing finance companies, professionalism in real estate and favorable reforms initiated by the government to attract global investors.

And, that is the undeniable verdict of a Price Waterhouse Coopers study conducted on the investment environment in terms of Indian real estate. Ever since the Government of India gave its stamp of approval to 100% foreign direct investment (FDI) in housing and real estate, NRIs, overseas real estate developers, hoteliers, and others have been tracking a path to the sub-continent. Sensing the business potential for developing serviced plots, constructing residential / commercial complexes, business centres / offices, mini-townships, investments in infrastructure facilities e.g. roads, bridges, manufacture of building materials, etc., FDI is flooding in to take advantage of the tremendous real estate opportunities.

Indian Real Estate: Growing Potential

The increasing demand for Indian real estate has not only generated employment, it has also been instrumental in the growth of steel, cement, bricks and other related industries. Estimated to be in the region of US $12-billion, real estate development in India is growing by as much as 30% each year. Already, eighty percent of Indian real estate has been developed for residential space, and 20% comprises of shopping malls, office space, hospitals and hotels. Fuelled largely due to off-shoring / outsourcing of BPOs, call centres, high-end technology consulting and software development and programming firms, real estate growth in India has great investment prospectives.

Indian Real Estate: Investment Opportunities

Tax reform measures in the last few years have ensured real estate in India is one of the most productive investment sectors, with money invested in real estate offering regular returns on investment including appreciating in value. And, the Government of India by opening up 100% foreign direct investment, and fiscal reforms like stamp duty and property tax reductions, setting up real estate mutual funds has turned real estate into a promising investment option.

Already, it has approved the first Rs. 100-crore FDI project in Gurgaon. With urban populations expected to grow from 290-million to 600-million by 2021, housing requirements are expected to top 68-million by 2021, which means India 's urban housing sector could do with an investment of US $25-billion over a 5-year period. Poised for rapid urbanisation, 3 out of 10 of the world's largest cities are in India . An influx of jobs due to off-shoring / outsourcing has resulted in rising disposable incomes, increased consumerism, factors responsible for changing the face of residential and commercial real estate in India.

Wishing to take advantage of real estate investment opportunities, banks and housing finance companies are falling over themselves to tie-up with developers or offer project loans at competitive rates.

Indian Real Estate: Foreign Direct Investment (FDI)

Recent government policies have seen to it that inbound FDI for housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure, no longer requires prior government approval, with the exception of the Reserve Bank of India (RBI). It is important that all inward remittances or issues of shares to NRIs are reported to RBI within 30-days, and all FDI in the above areas is subject to the following conditions:

Minimum area for development under each project is as under: Serviced housing plots, minimum requirement of 10 hectares. Construction-development projects, minimum built-up area requirement of 50,000 sq. metres. Combination project, either of the above two conditions suffices. Investment is further subject to the following conditions: Minimum capital investment = US$10 million for a wholly owned subsidiary, and US$5 million for joint ventures with Indian partners. Further, the funds have to be brought in within six months of commencing business.

It is not permissible to repatriate original investment before a period of three years from the date of minimum capital investment. However, if the investor gets prior approval from the Government through FIPB, early exit is permitted.

Fifty percent of the project is to be completed within 5-years from the date of obtaining all legal clearances. No undeveloped plots can be sold where roads, street lighting, water supply, drainage, sewerage and other conveniences are not available. Serviced housing plots can only be sold if the investor has provided infrastructure and obtained a completion certificate from the concerned local body / service agency.

Development has to be in accordance with town master plans, planning norms, standards, and local bye-laws.

The investor is responsible for obtaining all necessary approvals, including building / layout plans, internal / external / peripheral area development, infrastructure facilities, payment for development and other charges. All development has to be in compliance with State Government / Municipal / Local Body requirements that are prescribed under applicable rules / bye-laws / regulations. Further, Non Resident Indians (NRIs) are allowed investment under the Automatic Route of FDI in the following Housing and Real Estate Sector:

Services plot development and construction of built-up residential premises.

Real estate investment covering construction of residential / commercial premises including business centres, offices, etc. Development of townships.

City / regional level urban infrastructure facilities, including roads and bridges.

Investment in manufacture of building materials. Investment in participatory ventures in (i) to (v) above

Investment in housing finance institutions.

Permissible FDI private / joint / state investment in construction in the export processing zones (EPZS) / special economic zones (SEZS) is as follows:

100% FDI real estate investment within Special Economic Zone (SEZ). 100% FDI for developing a township within the SEZ i.e. residential areas, markets, playgrounds, clubs, recreation centres etc.

Standard Design Factory (SDF) building development in existing Special Economic Zones. SEZ land may be leased or sub-leased to developers as per relevant guidelines for this purpose.

Full freedom to allocate developed plots to approved SEZ units on commercial basis including competent authorities for provision of water, electricity, security, restaurants, recreation centres etc. along commercial lines.

As you read this, a wide spectrum of changes are and have taken place in Indian real estate. Various proposed reforms e.g. removal of tenancy laws, computerization of land records, correction in taxation structure etc., are ensuring India emerges as a favoured and profitable destination for real estate developers / investors, both domestic and international.

Why real estate investment stands out?

Investment avenues

Returns

Volatility

Liquidity

Risk

Stock market

High

Very high

High

Very high

Bond/Notes

Moderate

Moderate

High

Low

Bank deposits

Moderate

Low

High

Low

Precious metals

High

Moderate

Moderate

Low

Real estate

High

Low

Low

Low


 

The promising avenues of real estate investment:

The following table gives a list of the factors to be considered in case of investing in either commercial or residential real estate:

Factor

Commercial

Residential

Area

  • Prime areas with no new supply ahead these areas will be more expensive.

  • Areas where affordable housing is available at a very small premium over cost of construction.

Location

  • An easily accessible location, high visibility and availability of basic services (transport, water, electricity, bank ATMs).

  • Slightly away from the hustle-bustle, yet close to shopping areas.

  • Basic services remain very important.

Quality of construction

  • Infrastructure like elevators in multi-storeyed buildings and generators determine yield potential.

  • Best to buy from reputed developers.

  • Infrastructure like water and power supply, security, maintenance services and car parking space are some of the other issues to consider.

  • But make a first-hand evaluation and inspection.

Title

  • The ownership title of the property must be indisputable, else you could end up fighting for your rights for many years in court.

  • Some investors opt for loans only to ensure this as banks do a thorough check to protect their interests.

Lease status

  • A property that is already leased out to a quality (reliable) tenant. This ensures immediate cash flows from rentals.

  • Leased premises considered better than vacant ones (if there is no tenancy dispute).

Tenant quality

  • A reputed and financially sound tenant – a big corporate house or a bank, for instance. Banks are attractive because of their releasability potential.

  • Company or bank leases usually preferred as a safeguard against disputes.

Size

  • Fair to large size: Quality lessees will look at a certain minimum area. Experts believe that such spaces will on average cost more than Rs 1 crore, though some good retail spaces could go for less.

  • Small, affordable properties see greater liquidity and genuine user demand.

  • Easier to get tenants for such houses.

Yields and appreciation

  • Normally, if you’ve got the area and location right, this won’t give you worries. But remember to evaluate yields before investing in commercial property as prices of such properties tend to be a volatile, and capital appreciation potential is difficult to assess.

  • Residential properties are less volatile, but you get lower returns.


 

Determining Real Estate Returns:

Real estate returns, like stocks, are determined by a combination of two factors:

The only difference in the two is that in real estate, the lease rentals are fixed, largely predictable over a period of time and a very significant component of overall returns. Investors wanting to earn rentals from residential property can get an average yield of around 6-7 %, and this has been constant for a long time. Most lease deals have an escalation clause that provides for close to 15% upward revision in rentals after three years. This would further improve the returns beyond the existing tenure. For commercial property, the lease rental yields are even better at 10-13 % and form the basis for investment.

To arrive at a correct and more realistic estimate of returns, an investor should consider the following five factors:

When renting it out

As the owner, one will be taxed on the annual value under the head income from house property, provided one does not use it for business or a vocation. The annual value will be the actual rent received/receivable. When the actual rent is less than the expected rent, the income from the property is taxed on the national rent (expected rent).

When selling

Funding sources supporting investment in real estate:

Tips while Buying Property

A buyer should exercise utmost caution while buying property in India, be it for residential or commercial interests. Below is a real estate purchase checklist that includes tips for property buyers, discussed under specific categories:

Buying with preliminary research:
It is advisable to identify the property in terms of:

  1. Nature of property:
  1. Type of Seller:
    Whether individual/partnership/HUF/joint stock company/Association of persons. Reputation of the builder or seller.
  1. Potential resale value or the potential rental income of the property.
  1. Proximity afforded:
    Whether close to central business district, entertainment centres hotels, restaurants, transport hubs, hospitals, market, schools, etc.
  1. Quality of construction:
    Whether structural stability of the building, electrical systems, plumbing systems, drainage, sanitary fittings, roof, walls, ceilings, floors, paint work, foundation, doors and windows is sound or not.

Determining the title and interest of the Seller:

  1. Thoroughly check and satisfy yourself with the marketability of the property title in terms of whether the owner is the original owner and whether the title deed is original. Obtain legal opinion through an Advocate of repute, who can examine the deeds to establish the ownership of the property by the Seller.
  1. Similarly, if you are buying a resale flat, ask for the Purchase Agreement, which is the Agreement between the current seller and the previous owner and get it scrutinized by an Advocate. He/she will identify whether the seller is truly entitled to sell the property, whether any mortgage exists on the property and if it has been paid off and whether there is any lien on the property.

    Retain a copy of this document and also check the original.
  1. Avoid engaging in negotiations over a disputed property.

Documentation:

  1. Ask for all the legal documents in original. Check whether a 'No Encumbrance Certificate' has been obtained to ensure that no mortgage exists/has been existing on the property. Get a 'No Objection Certificate' from the Builder/ Society.

  2. Check for authentic approvals from government agencies like the land development, planning authority and Income Tax Department. Ask for original documents and certificates.

  3. Get a full and true disclosure of all outgoings such as municipal and other local taxes, taxes on income, water charges, electrical charges etc.

  4. Take a declaration from the seller on what add-on, if any, he is giving along with the property.

  5. Make sure to include every conceivable clause in the Sales Agreement. A Sale Agreement is the only written evidence of the deal so it should include everything from payment terms to exact description of the title.

  6. Understand the finer details of the sale contract properly to arm yourself with knowledge that shall be beneficial during and after the transaction is complete.

  7. Learn about the advantages of Caveat and put one on the title.

  8. Take care that all the duties that are to be paid on the property like Stamp duty, Registration fees and taxes is included in the Sale Deed/Agreement to Sell.

  9. Ask for any other information and documents as may be prescribed under the law.

Post Registration Activities:
Subsequent to the registration of the Sale Deed, you should:

You can use the services of a real estate expert to complement your efforts in an effective manner, saving time and energy and money.

 

LEGAL DOCUMENTS

Owning a house is an important thing in ones life. However, one needs to be careful while buying land/house to avoid falling into legal hassles. A lot of care is needed from the beginning- right from site seeing till the registration of the land. The legal status of the land is one of the first issues that you should address before confirming a property. The first thing is to find out the tenure, legal right of the holder of the land in government records. The tenure or possession right could be freehold, leasehold or may be held under a government grant or 'sanad'. Freehold land is always most preferable. The seller should provide all the necessary documents to the buyer.

 
  • Title deeds
  • Tax receipt and bills
  • Encumbrance Certificate
  • Pledged land
  • Measuring the land
  • Buying land from NRI land owners
  • More than one owner
  • Agreement
  • Registration
  • Changing the title in Village office
Title deeds

The first step is to see the title deed of the land which you are going to buy. Confirm whether the land is in the name of the seller and that the full right to sell the land lies with only him and no other person. Don't be satisfied with the Xerox copy of the title deed. Insist on seeing the Original Deed. Sometimes the seller may have taken a loan by pledging the original deed. It also needs checking whether the seller has permitted any entry/access to others through this land and whether any other fact has been suppressed/left undisclosed by the owner of the land. It is better to get the original deed examined by a lawyer. Along with the title deed, the buyer can also demand to see the previous deeds of the land available with the seller.

Tax receipt and bills

Property taxes which are due to the government or municipality are a first charge on the property and, therefore, enquiries must next be made in government and municipal offices to ascertain whether all taxes have been paid up to date. The owner should also possess the latest tax paid receipts, which you may inspect. Enquiries should also be made in various departments of the municipality to ascertain whether any notices or requisitions relating to the property have been issued and are outstanding and not yet complied with.

While inspecting the property tax receipt, it can be noted that there are two columns in the tax receipt. Make sure that the name entered in the owner's column is correct. The second column will be for the name of the one who paid the tax. Sometime the owner may not have the tax receipt with him, in such cases, contact the village office with the survey no. of the land and confirm the original owner of the land. If you are buying a house along with the property, then the house tax receipt should also be checked. Also ensure that the electricity and water bills are up-to-date and if there any is balance payment to be made, ensure that it is made by the seller.

Encumbrance Certificate

Before buying any land or house, it is important to confirm that the land does not have any legal dues. It is available as a certificate called encumbrance from the sub registrar office where the deed has been registered, stating that the said land does not have any legal dues and complaints. The encumbrance certificate for the past thirteen years should be taken or for more clarification, you could demand 30 years encumbrance certificate to be checked. If you still have anymore doubts, you can take a Possession Certificate of the ownership of the particular land, which is available from the village office.

Pledged land

Some people may have taken loan from the bank by pledging their land. Ensure that the seller has paid back all the amounts due. Don't get satisfied with the receipt of the payment made. A release certificate from the bank is necessary to release all the debts over the land legally. You could buy a land without the release certificate. But if you want to take a loan in future, the release certificate is a must.

Measuring the land

It is advisable to measure the land before registering the land in your name. Ensure that the measurements of the plot and its borders are accurate. You can do this with the help of a recognized surveyor. This will avoid lots of problems in the future. You could also take the Survey Sketch of the land from the Survey Department and compare for accuracy.

More than one owner

In some cases, the land will be owned by more than one people. So before registering, check if there is more than one owner, and if there is, get release certificate from the other people involved.

Buying land from NRI land owners

A person staying abroad can also sell his land in India by giving a Power of Attorney to a third person authorizing him the right to sell the land on his behalf. But in such cases, the power of attorney should be witnessed and duly signed by an officer in the Indian embassy in his province. There is no legal support for Power of attorney signed by a notary public.

Agreement

Once all the matters, financial/otherwise are settled between the parties, it is better to give an advance and write an agreement. This ensures that the owner does not change his word regarding the cost as well as make a sale to someone else who offers more money. The agreement should be written in 50 Rs stamp paper. The agreement should state the actual cost, the advance amount, the time span within which the actual sale should take place and how to proceed in case of any default from either parties, to cover the loss. The agreement can be prepared by a lawyer and should be signed by both the parties and two witnesses. After signing the agreement if one of the parties makes a default, the other party can take legal action against him.

Registration

The land can be registered in a sub registrar office, after preparing the title deed including all the relevant information. You could get the title deed written by a government licensed Document writer. Even lawyers can prepare the deed, but the document can only be computer printed or typed, not handwritten. Handwritten documents can be prepared by only those who hold the scribe license.

A draft should be prepared before actually writing the document in stamp paper. Make sure all the details mentioned are accurate. If there is incorrectness in the document after registering, a secondary document with the correct details has to be registered and depending on the incorrectness, the registration expenses will be repeated.

Make sure that the deed is registered within the time limit mentioned in the agreement. Original title deed, previous deeds, Property/House Tax receipts, Torence Plan (optional) etc plus two witnesses are needed for registering the property. Torence plan is a detailed plan of the property prepared by a licensed Surveyor which will have accurate details of the measurements including width, length, borders etc. This plan is needed only in some specific areas. For land costing more than five lakhs, the seller should submit either his Pan card or Form Number 16 during registration.

The expenses involved during registration include Stamp Duty, registration fees, Document writers/ lawyers' fees etc. The stamp duty will depend on the cost of the property and varies from Municipality to Corporation to Panchayat. In Panchayat the stamp duty will be 4% of the cost of the land whereas in Municipality it is 5% and in Corporation 6%. Two percentages will be charged as the registration fees. Document writers fees also depend on the cost of the property and varies with individuals. There is a percentage prescribed by the government as Document writers fee and they cannot charge more than the prescribed limit.

After registration, the registered document will be received after 2-3 weeks, from the registrar office.

Changing the title in Village office

The whole legal procedure of buying the property will be complete only if the new owners name is added in the village office records. An application can be made along with the copy of the registered deed to the Village office to get this done

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II. FAQs

GENERAL

  1. What is meant by valuation of property?
    The valuation process evaluates the market value of the property. Demand and supply forces operating in the market, as well as other factors like type of property, quality of construction, its location, the local infrastructure available, maintenance, are all taken into consideration before the market value is decided.
  2. How does property valuation help?
    Typically, if a real estate agent is asked to judge the value of a piece of property, he would do so based on information of recent sales or purchases of similar properties in that area.
    Though this may give a fair idea of the property’s market value, an official property valuation would carry more weight. E.g. if you need to use this piece of property as a security against a loan, the bank’s loan approval process would be faster and smoother if the property is certified by an official valuer. Many banks now insist on valuation certificates before issuing loans using properties as security. The value thus certified may also have chances of getting a higher amount of loan sanctioned.
    Another benefit of official valuation is that it is a useful negotiating tool when selling the property.
    Such certification also becomes essential in situations where the correct value of the property has a legal bearing—such as, a will statement, insurance papers, business balance sheets etc.
  3. What is the meaning of a property’s market value? How is its stamp duty decided?
    The price that a property can command in the open market is known as its market value. Stamp duty is based on the market value or the agreement value of the property, whichever is greater.
  4. What does the term ‘Leasehold Property’ mean?
    When a piece of property is given or ‘leased’ to an individual (known as the ‘Lessee’) for a stipulated period of time, by the owner of the property (known as the ‘Lessor’), the property is referred to as Leasehold Property. A certain amount is fixed by the Lessor to be paid as lease premium and annual lease. The land ownership rights remain with the Lessor. Transfer of property requires prior permission.
  5. What does the term ‘Freehold Property’ mean?
    When ownership rights for a piece of property are given to the purchaser for a price, that property is referred to as Freehold Property. Unlike in the case of leasehold property, no annual lease charges need to be paid and the freehold property can be registered and / or transferred in part(s).
  6. Are there any benefits in converting a leasehold property to a freehold one?
    There are several benefits: if you convert the property to a freehold property, you become a full-fledged owner by getting the sale deed and having it registered. A freehold property has better marketability and can be sold, mortgaged or kept for standing security, which cannot be done with leasehold property.
  7. Are there any income tax considerations while transferring newly acquired property?
    If the transfer takes place within three years of purchase, the income tax exemption under Section 54F of the Income Tax Act does not hold good.
  8. What constitutes conclusion of sale of a property?
    An agreement of sale, coupled with actual possession of the property would be considered as a conclusion of the sale. Usually, the entire amount is paid at the time of handing over possession.


RESIDENTIAL

  1. What is the difference between carpet area, built-up and super built-up area?
    The area of an apartment or building, not inclusive of the area of the walls is known as carpet area. This is the area that is actually used and in which a carpet can be laid. When the area of the walls including the balcony is calculated along with the carpet area, it is known as built-up area. The built-up area along with the area under common spaces like lobby, lifts, stairs, garden and swimming pool is called super built-up area.
  2. When there are apartments of different sizes in a complex, how is the maintenance charge calculated?
    Legally, the actual area owned by the individual is the basis for calculation of maintenance charge.
  3. Why do Co-operative Housing Societies collect a Sinking Fund?
    Co-operative Housing Societies have a statutory obligation to collect a Sinking Fund. This is done so that in case the building needs to be repaired or reconstructed in the future, the society has sufficient funds to carry out the work. The amount to be contributed is decided by the General Body of the society; it should be at least ¼ percent per annum of the cost of each apartment, excluding the cost of the land. This fund may be used after a resolution is passed at the General Body meeting with the prior permission of the Registering Authority. This could be to carry out reconstruction, repairs, structural additions or alterations to the building as the architect thinks is required and certifies.


CORPORATE

  1. Can corporate bodies use residential properties as office space?
    It is illegal to put residential properties to commercial use. However service-based industries are allowed to operate from residential areas, on the condition that they will vacate the property if any complaint is received from other residential owners.
  2. Before purchasing property owned by a company, what aspects should be considered?
    Before purchasing property from a company, it is necessary to verify with the Registrar of Companies that the property is not mortgaged or is not being used as a security against a loan, otherwise it is not considered a freehold property.


NRIs

  1. Do NRI's require permission of Reserve Bank to acquire immovable property in India?
    No. NRI's do not require any permission to acquire any immovable property in India other than agricultural / plantation property or a farm house.
  2. Do NRI's require permission of Reserve Bank to transfer immovable property in India?
    No. NRI's do not require any permission to transfer any immovable property in India. Permission is required only in the case of transfering of agricultural or plantation property or farm house to another citizen of India NRI or PIO.
  3. Do PIO's require permission of Reserve Bank to purchase immovable property in India for their residential use?
    Reserve Bank has granted general permission to foreign citizens of Indian origin, whether resident in India or abroad, to purchase immovable property other than agricultural land/farm house/plantation property, in India. They are, therefore, not required to obtain separate permission of Reserve Bank or file any declaration.
  4. In what manner should the purchase consideration for the immovable property be paid by PIO's under the general permission?
    The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from any non-resident accounts maintained with banks in India.
  5. Can such property be sold without the permission of Reserve Bank?
    Yes. Reserve Bank has granted general permission for sale of such property. However, where another foreign citizen of Indian origin purchases the property, funds towards the purchase consideration should either be remitted to India or paid out of balances in non-resident accounts maintained with banks in India.
  6. Can sale proceeds of such property if and when sold be remitted out of India?
    In the event of sale of immovable property other than agricultural land/farm house/plantation property in India by a NRI or PIO, the authorised dealer may allow repatriation of the sale proceeds outside India, provided all the following conditions are satisfied: -

    • The immovable property was acquired by the seller in accordance with the provisions of the Exchange Control Rules/Regulations/Law in force at the time of acquisition, or the provisions of the Regulations framed under the Foreign Exchange Management Act, 1999;

    • The amount to be repatriated does not exceed (a) the amount paid for acquisition of the immovable property in foreign exchange received through normal banking channels or out of funds held in foreign currency non-resident account or (b) the foreign currency equivalent, as on the date of payment, of the amount paid where such payment was made from the funds held in non-resident external account for acquisition of the property; and

    • In case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties.
  7. What other facilities are available for repatriation?
    Authorised dealers can allow remittance up to USD 1 million for any purpose, per calendar year from balances in NRO accounts subject to payment of applicable taxes. The limit of USD 1 million per year includes sale proceeds of immovable properties acquired by the NRI/PIO's while they were resident in India and held for a period of 10 years and above. In case the property is sold after being held for less than 10 years, remittance can be made if the sale proceeds were held for the balance period in NRO account or in any other eligible instruments.
  8. Can PIO's acquire or dispose of immovable property by way of gift?
    Yes. Reserve Bank has granted general permission to foreign citizens of Indian origin to acquire or dispose of immovable properties other than agricultural land/farmhouse/plantation property by way of gift from or to an Indian citizen, NRI or PIO.
  9. Can NRI's/PIO's rent out the properties (residential/commercial) if not required for immediate use?
    Yes. Reserve Bank has granted general permission for letting out any immovable property in India. The rental income or proceeds of any investment of such income is eligible for repatriation
  10. Can NRIs obtain loans for acquisition of a house/flat for residential purpose from financial institutions providing housing finance?
    Reserve Bank has granted general permission to certain financial institutions providing housing finance e.g. HDFC, LIC Housing Finance Ltd., etc., to grant housing loans to NRI's for acquisition of a house/flat for self-occupation subject to certain conditions. The purpose of loan margin money and the quantum of loan will be at par with those applicable to housing loans to residents. Repayment of loan should be made within a period not exceeding 15 years out of inward remittances or out of funds held in the investor's NRE/FCNR/NRO Accounts.
  11. Can authorised dealers grant loans to NRIs for acquisition of a flat/house for residential purposes?
    Authorised dealers have been granted permission to grant loans to NRI's for acquisition of house/flat for self-occupation on their return to India subject to certain conditions. Repayment of the loan should be made within a period not exceeding 15 years out of inward remittance through banking channels or out of funds held in the investors' NRE/FCNR/NRO accounts.
  12. Can authorised dealers grant housing loan to NRI's where he is a principal borrower with his resident close relative as a co-applicant / guarantor or where the land is owned jointly by such NRI borrower with his resident close relative?
    Yes. Such housing loans availed in rupees can also be repaid by the close relatives in India of the borrower.
  13. What are the guidelines for acquisition of agricultural land / plantation property / farmhouse by NRIs and foreign citizens of Indian origin?
    All requests for acquisition of agricultural land / plantation property / farm house by any person resident outside India may be made to The Chief General Manager, Reserve Bank of India, Central Office, Exchange Control Department, Foreign Investment Division (III), Mumbai 400 001.

    For further information please visit the FAQ Section of http://www.rbi.org.in


MISCELLANEOUS

  1. How is a lease agreement created?
    A lease agreement can be reached in either of two ways, depending upon each case:

    •In cases where the lease contract is from year-to-year / exceeding one year’s rent / reserving yearly rent, then a registered instrument can be created, which both the lessor and the lessee must execute.

    •In cases other than the above, an oral agreement followed by delivery of possession is considered enough.
  2. What are the charges to be paid while gifting property?
    When a gift of property is made, a gift deed needs to be made by a lawyer. Stamp duty on the market value of the property also needs to be paid, as well as the necessary registration charges.

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III. LAWS GOVERNING REAL ESTATE

Investing in real estate in India requires compliance with various laws, some 100 years old and some new. In addition to Central Govt laws, there are state laws governing real estate transactions and investment.

The Central laws governing real estate include:

Indian Transfer of Property Act

The Transfer of Property Act governs the transfer of property by various means. Sales, mortgages (other than by way of deposit of title deeds) and exchanges of immovable property are required to be registered by virtue of the Transfer of Property Act. Therefore, all the above documents must be in writing and registered.

Indian Registration Act, 1908

The purpose of this Act is the conservation of evidence, assurances, title, publication of documents and prevention of fraud. It details the formalities for registering an instrument. Instruments which require mandatory registration include:

Sales, mortgages (other than by way of deposit of title deeds) and exchanges of immovable property are required to be registered by virtue of the Transfer of Property Act. So all the above documents have to be in writing.

Section 17 of the Act provides for optional registration. An unregistered document will not affect the property comprised in it, nor be received as evidence of any transaction affecting such property (except as evidence of a contract in a suit for specific performance or as evidence of part-performance under the Transfer of Property Act or as collateral), unless it has been registered.

Thus the doctrine of part performance dealt with under Section 53 A of the Transfer of Property Act and the provision of Section 49 of the Registration Act (which provide that an unregistered document cannot be admissible as evidence in a court of law except as secondary evidence under the Indian Evidence Act) together protect the buyer in possession of an unregistered sale deed and cannot be dispossessed. The net effect has been that a large number of property transactions have been accomplished without proper registration.

Instruments such as Agreement to Sell, General Power of Attorney and Will have been indiscriminately used to effect change of ownership. Therefore, investors in real estate have to be careful in their due diligence.

Therfore, establishing “Clear Title” on your desired Indian Real Estate is more complex and time-consuming than it is in America or Europe. Please factor this in your due-diligence.

Reference: http://www.madaan.com/realestate.html

Real Estate Consultant India
   
 
In Real Estate there are numerous queries one might have but doesn’t have correct answers to them. Our experienced professional executives at Professional Enterprises are totally geared up to assist you with any queries you may have about Real Estate. Whether it’s understanding Real Estate or approaching the market about a product you would want to sell, purchase, lease, finance & even invest in. Count on us to assist you with simplest and the most complex query till you are satisfied. WE DON’T charge any fees for your queries.
 
Getting in touch with us for Real Estate requirement will help you in saving valuable time & Real Estate hassles & of course peace of mind, so do try us.
1). What are the documents that should be checked before purchase of a flat under construction?
 
2).What are the documents that should be checked before purchase of an independent house/ flat already built?
 
3). What are the documents that should be checked before purchase of vacant land?
 
4). What is a title deed/ title document?
 
5). What is a power of attorney deed?
 
6).Should a power of attorney be registered?
 
7). Can an irrevocable power of attorney deed be revoked?
 
8). What is meant by intestate succession?
 
9). Can a will, be considered a title deed?
 
10).What documents are generally called the title deeds?
 
11). What is meant by a sale deed?
 
12). What is meant by settlement deed?
 
13). What is an Encumbrance Certificate?
 
14). What is a patta?
 
15). Should the original documents be checked before entering into a sale agreement?
 
16). Should an agreement of sale be registered?
 
17). What is lay-out approval?
 
18). What are sanctioned plan/ building approval?
 
19). What are sanctioned plan/ building approval?
 
20). What is meant by purchase of car-parking area?
 
21).What is meant by freehold property?
 

1). What are the documents that should be checked before purchase of a flat under construction?

  • Title deeds
  • Encumbrance certificate
  • Revenue record
  • Building sanction and approval
  • All the title documents in respect of the land on which the flat / apartments is built needs to be checked for minimum period of past 15 years.
  • Encumbrance certificate and revenue record also needs to be checked. The building plan with proper sanction from appropriate authority, together with permission from the authorities for carrying out such construction- called the planning and works permit need to be verified.
 
 

2).What are the documents that should be checked before purchase of an independent house/ flat already built?

  • Title deeds
  • Encumbrance certificate
  • Revenue record
  • Building sanction and approval
  • Lay-out approval
  • All the title documents in respect of the land on which the house is built needs to be checked for minimum period of past 15 years. Encumbrance certificate and revenue record also needs to be checked. The building plan with proper sanction from appropriate authority, together with permission from the authorities for carrying out such construction- called the planning and works permit need to be verified. The lay-out approval for the land and the property tax paid receipt for the house needs to be checked.
 
 

3). What are the documents that should be checked before purchase of vacant land?

  • Title deeds
  • Encumbrance certificate
  • Revenue record
  • All the title documents in respect of the land need to be checked for minimum period of past 15 years. Encumbrance certificate and revenue record (patta) also needs to be checked. The lay-out approval for the land and tax paid receipts for the vacant land needs to be checked.
  • What is meant by title report / search on title/ title opinion?
  • The report given by a competent advocate after a thorough investigation, scrutiny and verification of all available original and other documents – establishing the transfer of ownership from the first owner to the present owner. A history on the ownership of the property is a title report.
 
 
4). What is a title deed/ title document?
A deed by, which the owner has the right of ownership on the property. This deed could be a registered document or unregistered in some legally permissible situations.
 
 
5). What is a power of attorney deed?
The document by which one person appoints another person as an agent to act on his /her behalf is a power of attorney deed. The person who appoints an agent is called the principal and the agent is called the power of attorney agent.
 
 
6).Should a power of attorney be registered?
Whenever a power of attorney agent is empowered with the power of selling properties, it is required to have the power of attorney deed registered. If the power of attorney is for some other specific purpose, then it not required to be registered.
 
 
7). Can an irrevocable power of attorney deed be revoked?
Yes. In law there is nothing like an irrevocable power of attorney. Either on mutual consent or unilaterally the power of attorney deed can be revoked or cancelled by the principal.
 
 
8). What is meant by intestate succession?
When a property owner dies without leaving any document in writing, informing as to how his/her property has to be shared by his/her legal heirs after his/her demise is generally referred to as intestate succession.
 
 
9). Can a will, be considered a title deed?
Yes. The will shall be considered as a title deed like any other title deed.  The will shall be the title deed for the beneficiaries mentioned in the will.
 
 
10).What documents are generally called the title deeds?
Any document by which the owner derives right of ownership over the property is called a title deed. Well, a title deed includes a sale deed, settlement deed, release deed, exchange deed, partition deed, family arrangement, memorandum of understanding and will.
 
 
11). What is meant by a sale deed?
A document by which, the right in ownership of a property has been sold to another person, by the owner of the property. Sale is always for a certain sum of money agreed between the seller and the purchaser. Wherever the sale amount exceeds Rs.100/-, the sale deed has to be compulsorily registered.
 
 
12). What is meant by settlement deed?
Settlement deed can be executed between the members of a family only.  It is done out of natural love and affection for the other person. No money is involved.  There are certain restrictions regarding the persons who can settle and on whom properties can be settled.
 
 
13). What is an Encumbrance Certificate?
This is a certificate issued by the Sub- Registrar’s office under whose jurisdiction the property is situated, upon an application. This certificate will show all registered transactions that the property has gone through.
 
 
14). What is a patta?
This is a record issued by the government revenue authorities. This discloses the name of the owner of the property.
 
 
15). Should the original documents be checked before entering into a sale agreement?
Definitely yes, wherever it is legally possible, your advocate has to verify all the original documents. This is a must.
 
 
16). Should an agreement of sale be registered?
An agreement of sale does not require compulsory registration under law. However it left to the discretion of the seller and buyer to register the agreement of sale.
 
 
17). What is lay-out approval?
Extents of land are put together and divided into housing plots. Such division requires sanction from appropriate authorities. Such sanction is called the lay-out approval.
 
 
18). What are sanctioned plan/ building approval?
The proposed building will be put in the form of a plan and the appropriate authorities sanction has to be obtained before construction. This is also called the blueprint.
 
 
19). What are sanctioned plan/ building approval?
The proposed building will be put in the form of a plan and the appropriate authorities sanction has to be obtained before construction. This is also called the blueprint.
 
 
20). What is meant by purchase of car-parking area?
Purchase of car-parking is a limited right only. This is applicable only when there is covered car parking.  If car parking is marked in the open space, the open space being common land therefore need not be purchased.
 
 
21).What is meant by freehold property?
A property where the owners have absolute rights is called freehold property. This term also denotes that the property is not restricted by any limitations on rights.

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Q22.
What documents are required while buying commercial or residential property?
A.

When buying commercial or residential property you would need to check for the following documents:

  • Market Trends about prevalent rates of property in the vicinity and last known transactions.
  • Identify the property you wish to purchase.
  • Formulate commercial terms.
  • Distinguish between terms and conditions of the contract which are negotiable and those which are fixed e.g. price, payment schedule, time of completion etc.
  • Avail of services of magicbricks.com. List your requirements with a reputed broker.
  • Ask for photocopies of the all deeds of title related to the property to be purchased. Examine the deeds to establish the ownership of the property by seller, preferably through an advocate. Ascertain the survey number, village and registration district of the property as these details are required for registration of the sale. Previous encumbrances and loans, if any, on the property must be cleared before completion of purchase of the property. The title of the Vendor to the property must be clear and marketable.
  • Finalise commercial terms of purchase of the property. Ascertain transfer fees, stamp duty and registration charges to be paid on purchase of the property.
  • Ascertain outgoings to be paid for the property i.e. property tax, water and electricity charges, society charges, maintenance charges.
  • Request Vendor to obtain, if applicable, consent, permission, sanction, no objection certificate of various authorities such as the (a) society (b) the income tax authority (c) Municipal Corporation (d) the competent authority under the Urban Land Ceiling and Regulation Act (e) any other authority.
  • Will you require a loan for making payment of the consideration amount. Ask for a pre-approval letter from the lending institution.
  • Permanent Account Number of Vendor and Purchaser under Income Tax laws Payment of stamp duty on the formal agreement or document for transfer of the property, signing by both the Vendor and Purchaser and registration
  • After payment of the entire sale price, take over legal possession of the property alongwith documents of title in original from the Vendor of the property
  • Change name of the holder of the property to the purchaser in the records of the society, electricity company, municipal corporation, Index II etc.
Q23. What is Stamp Duty and who is liable to pay the Stamp Duty, the buyer or the seller?
A.
Stamp Duty is a tax, similar to sales tax and income tax collected by the government, and must be paid in full and on time. A stamp duty paid instrument/document is considered a proper and legal instrument/document.

The liability of paying stamp duty is that of the buyer unless there is an agreement to the contrary. Section 30 of Bombay Stamp Act, 1958 states the liability for payment of stamp duty.
Q24.
What is meant by the market value of the property and is Stamp Duty payable on the market value of the property or on consideration as stated in the agreement?
A. Market value means the price at which a property could be bought in the open market on the date of execution of such instrument. The Stamp Duty is payable on the agreement value of the property or the market value, whichever is higher.
Q25. Are there any formalities to be completed or forms to be filled on execution of the Sales Deed or document of transfer?
A.

Yes. The formalities and forms may vary from State to State depending on where the property is situated.

  • Every State has its set forms under the Registration Rules that are required to be filled and filed along with and at the time of Registration of Sale Deed/Transfer Deed.
  • Under the provisions of the Income Tax Act and Rules for a transaction of sale, it is now compulsory for the Purchaser and Seller to give their Permanent Account Number and in the event of either the Seller and/ or the Purchaser would be required to fill Form 60 of the Income-Tax Rules.
  • In case of either the Purchaser or the Seller being a Non-Resident Indian, not assessed to tax in India, such a Party would be required to file Form 60 of the Income-Tax Rules.
Q26. What are the permission and papers that one should check with the builder when buying a flat in a building which is under construction?
A.

When you are buying a flat from a builder in a building under construction, you have to check the following things:

  • Approved plan of the building along with the number of floors.
  • Whether the floor that you are buying is approved.
  • Whether the land on which the builder is building is his or he has undertaken an agreement with a landlord. If so, check the title of the land ownership with the help of an advocate.
  • The building byelaws as applicable in that area and ensure that the builder is building without any violation of front setback, side setbacks, height, etc.
  • Check if the specifications given in the agreement to sell of the sale brochure match on the ground or not?
  • Whether urban land ceiling NOC (if applicable) has been obtained or not.
  • NOC from water, electricity and lift authorities has been obtained.
Q27.
Who is the appropriate authority for knowing the market value of the property?
A. The Sub-Registrar of the area, in whose jurisdiction the property is located, is the appropriate authority for knowing the market value of the property.
Q28. Within what time period should an agreement/deed have to be registered?
A.
The property agreement should be registered with the Sub-registrar of assurances under the provisions of the Indian Registration Act within four months of the date of its execution.
Q29.
What constitutes completion of the sale?
A. The transfer of a flat is concluded when you have an sale deed/ agreement for sale coupled with actual possession. Generally, in all cases the entire amount is paid simultaneously with the handing over of physical possession and signing of the transfer documents.
Q30. What is meant by leasehold and freehold properties?
A.
Leasehold properties (plot/built-up) are those in which perpetual leasehold has been granted by the title paramount in favour of the lessee. In such properties, the title paramount, i.e. President of India acts through DDA, L&DO, Leasehold properties are not freely transferable. Depending upon the covenants of the lease deed, prior permission of the lessor (DDA/ L & DO) is required to transfer the property.

Freehold properties are those where title paramount has conveyed the property in favour of the purchaser by conveyance/sale deed with no restriction on the right of the holder of the property to further transfer the property. Record of ownership of the freehold property can be ascertained from the office of the sub-registrar. It can be transferred by registration of sale deed.
Q31.
What formalities need to be completed by foreign citizens of Indian origin for purchasing residential immovable property in India under the general permission?
A.
They are required to file a declaration in for IPI and with the central office of Reserve Bank at Mumbai within 90 days from the date of purchase of immovable property or final payment of purchase consideration, along with a certified copy of the document evidencing the transaction and the bank certificate regarding the consideration paid.
   
Disclaimer:  The information contained herein should be used for reference only and We are not be responsible for any claims arising out of the use of any information displayed herein.

Owning a house is an important thing in one’s life. However, one needs to be careful while buying a property to avoid falling into legal hassles. Before buying a land, a number of checks need to be done to confirm that the land has a clear and marketable title. The legal status of the land is one of the first issues that should be addressed before confirming a property.

 

Title deeds

The first step is to see the title deed of the land, which you are going to buy.

* Confirm whether the land is in the name of the seller and that the full right to sell the land lies with only him and no other person.
* It is better to get the original deed examined by a lawyer. This is to check details like whether the seller has permitted any entry/access to others through this land and whether any other fact has been suppressed/left undisclosed by the owner of the land.
* Along with the title deed, you can also demand to see the previous deeds of the land available with the seller.
* In some cases, more than one person may own the land. So before registering, check if there is more than one owner, and if there is, get release certificate from the other people involved.

Conveyance Deed or Sale Deed

A sale agreement is a document by which the title of property is conveyed by the seller to the purchaser. Here, conveyance is the act of transferring ownership of the property from a seller to the buyer. This document will help you ascertain whether the property, which you are buying, is on land belonging to the society/ builder/development authority in which the property is located.

Tax receipt and bills

Property taxes, which are due to the government or municipality, are a first charge on the property and, therefore, enquiries must next be made in government and municipal offices to ascertain whether all taxes have been paid up to date.

* Inspect whether the latest tax paid receipts have been paid.
* Enquire with various departments of the municipality to ascertain whether any notices or requisitions relating to the property are outstanding.
* If you are buying a house along with the property, then the house tax receipt should also be checked.
* Also ensure that the electricity and water bills are up-to-date and if there any is balance payment to be made, ensure that it is made by the seller.

Encumbrance Certificate

Before buying any land or house, it is important to confirm that the land does not have any legal dues.

* Obtain a certificate called encumbrance from the sub registrar office where the deed has been registered, stating that the said land does not have any legal dues and complaints.
* You can check the encumbrance certificate for the past thirteen years or could demand verify the 30 years encumbrance certificate.

Pledged land

Some people may have taken loan from the bank by pledging their land.

* Ensure that the seller has paid back all the amounts due.
* Ask for a release certificate from the bank, which is necessary to release all the debts over the land legally.

Measuring the land

It is advisable to measure the land before registering the land in your name. Take the help of a recognized surveyor to ensure that the measurements of the plot and its borders are accurate. You could also take the survey sketch of the land from the survey department and compare for accuracy.

Purchasing land from NRI landowners

A person staying abroad can also sell his land in India by giving a Power of Attorney to a third person authorizing him the right to sell the land on his behalf. In such cases, the power of attorney should be witnessed and duly signed by an officer in the Indian embassy in his province.

Power Of Attorney

Power of Attorney is the power given to an agent by the principal to execute several acts and deeds for and on behalf of the principal. Stamp duty payable depends on the nature of power given.

When ‘power’ is given in respect of a number of acts in a number of transactions it is called General Power of Attorney. It is always advisable to hold a registered GPA while registering an immovable property in order to give better title to the property.

When ‘power’ is given in respect of a particular act pertaining to one transaction it is called Special Power of Attorney.

Agreement

Once all the matters, financial/otherwise are settled between the parties, it is better to give an advance and write an agreement. This ensures that the owner does not change his word regarding the cost as well as make a sale to someone else who offers more money.

* The agreement should be written in Rs.50 stamp paper.
* The agreement should state the actual cost, the advance amount, the time span within which the actual sale should take place and how to proceed in case of any default from either parties, to cover the loss.
* The agreement can be prepared by a lawyer and should be signed by both the parties and two witnesses.
* After signing the agreement if one of the parties
makes a default, the other party can take legal action against him.

Stamp Duty

It is tax, similar to sales tax and income tax collected by the Government, and must be paid in full and on time.
* A stamp duty paid is considered a legal document
and such gets evidentiary value and is admitted as evidence
in courts.
* Stamp duty is a State subject and hence would vary from state to state.
* When an agreement is to be stamped, it needs to be unsigned and undated one may execute the agreement only after the Stamp Office affixes stamps on the agreement.

Registration

Registration is the process of recording a copy of a document, transferring the title in immovable property to the office of the Registrar. It acts as proof that a transaction has taken place.

* A draft should be prepared before actually writing the document in stamp paper. Registration is done after the parties execute the document.
* The agreement should be registered with the Sub-Registrar of Assurance under the provisions of the Indian Registration Act, 1908 within four months from the date of execution of the document.
* Make sure all the details mentioned are accurate.
* Original title deed, Previous deeds, Property/House Tax receipts, etc plus two witnesses are needed for registering the property.
* The expenses involved during registration include Stamp Duty, registration fees, Document writers/ lawyers fees etc.
* Make sure that the deed is registered within the time limit mentioned in the agreement.
* Stamp duty should be paid prior to the Registration.

Changing the title in Village office

The whole legal procedure of buying the property will be complete only if the new owners name is added in the village office records. An application can be made along with the copy of the registered deed to the Village office to get this done. Purchase of property is a lifetime investment. A lot of care is needed from the beginning- right from site seeing till the registration of the land. Ensure that the documents of title are scrutinised for marketability with due care by an experienced advocate.

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Questions on House Purchase

Information on House, Owner & Broker

House Address (with area name, pin code)

 

 

 

 

House facing direction
(fencing gate and main gate)

 

Landmark near Ukkadam, to locate this house

 

Total Land Area (In Sqft)

 

Total buildup Area (In Sqft)

 

Pending work / Notes ?

 

Any local problems for this house (mafia – gunda – dada) – ask the locality. (No offense)

 

Owner Still alive ? (No offense)

 

House Sold by Owner or his children / grand children's ? - For signature reasons

 

Owner Name

 

Owner Address & Contact Number

 

.

 

 

Purpose of sale

 

Broker Name

 

Broker Address & Contact Number

 

 

 

Builder Info

 

Building Completed Date

 

 

 

 

Land & House Information

Pathram & Patta photo copy  (xerox) – Please collect a photo copy of these documents

Yes / No

 

Legal Opinion

 

1) Verify orginal Pathram & Patta

2) Any Legal Case on Land or Building

3) Villangam Certificate / Document

4) Sale history of the property, and the current owner info from the government department or lawyers legal opinion

 

 

Yes / No

 

 

 

Building License approval , Layout approval, Sub division approval - documents

 

Collect Document photo copy and document numbers – check weather the building has be built accordingly

Property tax paid till

 

House tax paid till

 

Government Municipal Approved Area ? (for water, drainage, electricity, telephone)

 

Rain water harvesting Required / Available

 

House Fencing Required / Available ?

 

Vaastu Shastra (Feng Shui) Verified ?

Yes / No (to self verify – please check the picture)

Number of rooms (excluding 1 hall and 1 kitchen and toilets)

 

Number of toilets (Indian, western)

 

Number of floors

 

Number of stairs ?

 

House is built using pillars or with out pillars (kallukattu – simple stone concrete)

 

How many floors can be raised further

 

What is the expected life of the house

Number of years

What modification you foresee to be done on this house (painting, building fence, or plaster - finish work)

 

Comment how the outside of the house looks (including roads, cleanliness, are there empty areas near this house – info on that ?)

 

Conditions of Doors / Windows, Floor (marble - mosaic ?), roof – ceiling, cracks

 

Is the terrace ready with red stone flooring for rain prevention ?

 

Any cracks on walls or leaks foreseen ?

 

How much empty space on the 4 sides of house ?

 

Any litigations with neighbors ?

 

Parking space for (2 wheeler, car – inside / outside / open space )

 

 

 

 

 

Sale & Payment Information

 

Land Value per sqft on the same area

2004

2005

2006

2007

Worth of land alone (approximately)

 

Worth of building alone (approximately)

 

Worth of the resident house with land

 

Housing Loan Taken ?

 

Any Unpaid Loan ? (Status)

 

Broker fees % or a fixed amount

 

Registration charges

 

Lawyer and legal fees, other charges

 

Total value of the transaction

 

Payment terms

Cash / Cheque / DD

Payment Duration

1 months to 6 months  or 1 shot payment

Witness ready on both sides ?

 

 

Info on House Facilities

Municipal Water Connection Available ?

 

Other Sources of water (bore well, well)

 

Number of water tanks (sump, overhead tank)

 

Do they have motor for pumping water to tanks ?

 

Water connection (board meter) number

 

Water connection active ?

 

Water bill paid till ?

 

Water problems so far ?

 

EB Connection (board meter) Number

 

EB Connection active

 

EB bill paid till ?

 

Electrical Equipments & House Fittings

 

Number of tube lights, bulb, fan connections ?

 

Number of tube lights, bulb, fan provided ?

 

Number of wash basin / kitchen sinks

 

Comments on Drainage systems (inside house)

 

Notes on Electrical Equipments & House Fittings

 

 

 

Time required to do “change of name / ownership” for EB, Water etc.,

 

 

 

Below is the Vaastu Shastra picture, please check the house with the same.

Photocopy means xerox/carbon copy (dark print, should be neat & readable)


OTHER GENERAL NOTES

FLAT NOTES

 

·         CHECK WHETHER THE DETAILS OF APPROVED PLAN HAS BEEN DISPLAYED AT  THE SITE.

·         CHECK WHETHER THE FLAT HAS BEEN CONSTRUCTED AS PER THE APPROVED PLAN.

·         CHECK WHETHER THE PROMOTER/POWER OF ATTORNEY HAS A RIGHT TO TRANSFER THE UNDIVIDED SHARES OF LAND.

·         VERIFY WHETHER ENTIRE UNDIVIDED SHARES OF LAND HAS BEEN TRANSFERRED BY THE

·         LAND OWNER/PROMOTER/POWER OF ATTORNEY TO YOU.

·         LAND OWNER/PROMOTER/POWER OF ATTORNEY HAS NO RIGHT OVER THE OPEN SPACES AND IN THE TERRACE AFTER ENTIRE UNDIVIDED SHARES OF LAND HAS BEEN TRANSFERRED.

·         CHECK WHETHER THE COMPLETION CERTIFICATE ISSUED BY THE LOCAL BODY HAS BEEN OBTAINED AFTER THE COMPLETION OF THE BUILDING.

·         IF YOU HAVE ANY FURTHER CLARIFICATIONS REGARDING PURCHASE OF PLOT/FLAT,

·         KINDLY CONTACT THE COUNSELLING COUNTER AT LOCAL BODY.

 

 

LAND NOTES

 

·         CHECK WHETHER THE SELLER HAS A RIGHT OVER THE PROPERTY.

·         CHECK WHETHER THE LAYOUT HAS BEEN APPROVED BY THE LOCAL BODY. (COPY OF APPROVED LAYOUT CAN BE OBTAINED FROM THE LOCAL BODY FOR NOMINAL FEE)

·         CHECK WHETHER THE ROADS AND PARK AREA HAS BEEN HANDED OVER TO THE LOCAL BODY THROUGH A GIFT DEED

·         CHECK WHETHER THE ABUTTING ROAD OF THE PLOT HAS BEEN MAINTAINED BY THE LOCAL BODY OR HAS BEEN HANDED OVER TO THE LOCAL BODY.

·         VERIFY WHETHER THE PLAN HAS BEEN PREPARED ACCORDING TO THE DEVELOPMENT CONTROL RULES.

·         TO CHECK WHETHER ALL THE DOCUMENTS/CERTIFICATES HAS BEEN ENCLOSED BEFORE SUBMITTING THE PLAN FOR APPROVAL TO LOCAL BODY.

·         TO OBTAIN PLANNING PERMISSION FROM LOCAL BODY AND BUILDING APPROVAL FROM THE CONCERNED LOCAL BODY.

·         IF NOT ACTION WILL BE TAKEN AGAINST THE UNAUTHORISED AND DEVIATED CONSTRUCTIONS.

·         KINDLY AVOID UNAUTHORISED/DEVIATED CONSTRUCTION AND STAY FREE FROM THE ENFORCEMENT ACTION OF LOCAL BODY.

 

 

LOCAL BODY MEANING - ANY ONE OF THE BELOW:

 

·         Municipal Administration and Water Supply,

·         TAHSILDAR, Panchayat, A village council in India

·         Department of Stamps & Registration,

·         REGISTRATION DEPARTMENT

·         Housing and Urban Development

·         Rural Development

 

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IV. Indian Real Estate Trends 2008

Indian Real Estate Trends 2008

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V. LAND RECORDS IN KARNATAKA ON WEB

 

Bhoomi (meaning land) is the project of on-line delivery and management of land records in Karnataka. It provides transparency in land records management with better citizen services and takes discretion away from civil servants at operating levels. Bhoomi (meaning land) is the project of on-line delivery and management of land records in Karnataka. It provides transparency in land records management with better citizen services and takes discretion away from civil servants at operating levels.


The Revenue Department in Karnataka, with the technical assistance from National Informatics Centre (NIC), Bangalore, has built and operationalised the BHOOMI system throughout the state. The BHOOMI has computerized 20 million records of land ownership of 6.7 million farmers in the state.

BHOOMI has reduced the discretion of public officials by introducing provisions for recording a mutation request online. Farmers can now access the database and are empowered to follow up. In the BHOOMI project, a printed copy of the RTC can be obtained online by providing the name of the owner or plot number at computerized land record kiosks in 177 taluk offices, for a fee of Rs.15. A second computer screen faces the clients to enable them to see the transaction being performed. A farmer can check the status of a mutation application on Touch Screen Kiosks. If the revenue inspector does not complete the mutation within 45 days, a farmer can now approach a senior officer person with their griveance.

Now, mutation requests are being handled strictly on a first-come-first-served basis eliminating preferential treatment and discretionary powers of the civil servants.

Operators of the computerized system are made accountable for their decisions and actions by using a bio-login system that authenticates every Login through a thumbprint. A log is maintained of all transactions in a session.

The new system has brought about a sea change in the way land records are maintained and administered in the state. The system has not only simplified the process of record keeping but has also provided many collateral benefits. This governance model has proven to be financially self-sustainable. It has become a trendsetter for e-Governance projects in the state as well as other parts of the country.

In the next phase of BHOOMI, the ‘LAND RECORDS ON WEB’ has be established wherein, all the taluk databases are getting uploaded to a web-enabled central database so as to allow the private agencies to set up the village – level kiosk to download the land records documents at the village and issue to the farmers. In this Private Public Participation (PPP) model, all the stakeholders will be benefited in land records delivery.

For procedure for Connectivity Click Here

FAQs

What is Pahani(RTC) ?

Pahani(RTC) is a very important revenue records, as it contains details of land such as owners' details,
area, assessment, water rate, soil type, nature of possession of the Land, Liabilities, Tenancy and Crops grown, etc.

Why is Pahani required ? 

Pahani is required for various purposes:
1. To know the genuiness of seller(owner) when land is being purchased.
2. It is required at Sub-Register's office when sale transaction is being done 
3. To raise the farm credit / loan from the Bank.
4. Court needs Pahani in case of Civil litigation.
5. For personal purpose."

What does Pahani contain?

Pahani contains valuable data related to piece of Land. It has the following information :
1. Survey Number and Hissa Number of Land.
2. Total Land under the Pahani.
3. Land Revenue details.
4. Land Owner's name with Extents and Khatha Number.
5. The way land is acquired by the owner.
6. Government/Public rights on the Land. 
7. Liabilities of the Owners on the Land.
8. Classification of the Soil.
9. Number of Trees.
10. Source of irrigation and area irrigated.
11. Cultivators Details.
12. Utilisation of land under various categories.
13. Details of Crops grown season-wise.
14. Details of Mixed Crops.

How to get the Pahani ?

One can get the signed copy of computerized PAHANI from PAHANI CENTRE, set up at the Tahsildar Office, instantaneously by paying Rs.15.00. If he is unable to come to Taluk office, it can be collected by paying Rs.15.00 to Village Accountant / Revenue Inspector, who inturn will collect computerized PAHANI from PAHANI CENTRE and hand it over.

How is the computerised RTC different from manual RTC ?

There is absolutely no difference in the contents of computerised RTC and manual RTC. However, the computerised RTC is neat and easily readable and understandable as details are printed in the respective Columns.
Further it cannot be tampered easily."


What are the benefits of computerisation to the Public ?
The Public will have lots of benefits from computerisation. The whole process of updation of Land Records will be transparent. The following are the benefits :
a. Farmer can collect his land records related documents from PAHANI CENTRE instantaneously by paying Rs.15.00.
b. Public can request Revenue Department to carry out the mutation on the land as per their transactions and collect the acknowledgement for that.
c. Farmer can come and see the status of 'mutation requested' by him and status of 'mutation-in-process' on his land. 
d. At TOUCH SCREEN KIOSK the Public can view the land records documents, status of mutation and various other reports.

What happens if I take manually written RTC in Computerised Taluk ?

Government of Karnataka has issued the order saying that in Computerised taluka, only computer generated RTC's are valid for all legal purposes and that handwritten RTC will not be recognized by Government"

What is Mutation ?

Mutation is a process through which Owner's name or his particulars like liabilities get changed because of some type of transactions. The type of transaction may be one of the following:

1. J-Slip-Sale through registered deed.
2. Inheritance - Change of Ownership because of death of the Owner.
3. Division of Land within the Family. 
4. Pledge / Release - Change in liabilities because of loan from bank or 
repayment to bank.
5. Court Decree - Based on the Court Order. 
6. Alienation - Conversion of land from agricultural to other purposes.
7. Acquisition by Government for Public purpose.
8. Grant of Land by Government to Poor People."

Is there any difference in Land Records Updation Process after Computerisation ?

NO. Updation process of Land Records is same in both Computerised and Manual systems. All the rules of Karnataka Land Revenue Act are followed as it is, in case of Computerised system with some added precautions."


When does the Owner name and his details Change ?

The change in Owner name and his details will take place when one of the following transactions occurs :
a. J-Slip - Sale transaction takes place at SRO.
b. Inheritance - Death of the Owner. 
c. Division of Land within Family Members.
d. Court Decree - Order of the court.
e. Grant by the Government.
f. Alienation for non-agricultural purposes.
g. Acquisition by Government. 
h. Podi - Division of RTC into 2 or more. 
i. Pledge/Release of the Land with / from banks."

How to bring New Owner's name or change the owner's details in the RTC ?

The Owners of the land will change because of purchase transaction, Inheritance, Division, Grant by Government, Court Decree. When one of these takes place, NEW OWNERS should approach the Revenue Department with the required document to incorporate their names. They can request for the same at the PAHANI CENTRE and collect the acknowledgement.
Similarly when loan is taken or repayment is done, to change the liabilities details, Owner can submit the request at the PAHANI CENTRE with required documents."

What is Objection and how to raise it ?

Objection is a complaint about the transaction. That is, if some transaction comes for change of Ownership, to the Revenue Department, before accepting as it is, department serves the notice to the interested parties and puts in the CHAVADI. If anybody feels it is illegal transaction or feels his rights on the land is in trouble, he can raise the Objection. He has to give a written Objection within 30 days from notice served date to Village Accountant / Revenue Inspector / Taluk Office."


When does crop data change in RTC ?"
Crop details will be written on the RTC once or twice in a year, depending upon the seasons. The Crops information will be written by Village Accountant after inspecting the field."

What to do if crops information is wrong in RTC ?

One can lodge a request to change the crop information on the PAHANI at the PAHANI CENTRE / Village Accountant. The same will be changed after " & " verification by Village Accountant / Revenue Inspector."

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VI. Agreement to sell

Murari Chaturvedi, Editor, Accommodation Times

The sale and purchase of flats requires considerable time for completion of process and compliance of various legalities. As there is no rental housing availability, people are forced to purchase flats on ownership basis by shelling out their life’s savings and further committing to pay monthly installments to the housing finance companies for almost all their working life. Under the  circumstances the Agreement to sell acquires greatest importance. The ownership contemplates, exclusive right of occupation in respect of a part of a building, right as to way, natural and modern amenities and easements, covenants relating to maintenance and service, and lastly, ownership of land remains joint and undivided. The agreement to sell covers all these plus other conditions. A  peculiar situation exists here because of two aspects in apartment legislation. One is about regulation of construction and sale of flat / apartment by builder or promoter and the second is about ownership enjoyment and maintenance of flat with transferable and heritable interest generally known as Apartment Ownership Act. Maharashtra, Gujarat, Karnataka, West Bengal and Punjab have separate statute on both these aspects. The states of Andhra Pradesh and Delhi have only one statute, covering partly both the aspects. Bihar, H.P., Kerala, M.P. Orissa, Tamil nadu and U.P. Have statute on the second only. Rajasthan have no such law. When the sale and purchase of property
is governed all over the country by the provisions of the Indian Contract Act 1872 and the Transfer of Property Act 1872, why should there by two sets of legislations for the single purpose. It creates confusion and legal problems. In Mumbai in all new constructions, the sale of flat is on ownership basis and the purchaser thinks he is the owners of the flat. But whether in reality it is  so? The answer is both yes and no. Maharashtra took the lead to legislate Apartments Laws. The Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act 1963 and Maharashtra Apartment Ownership Act 1970 are modeled on American pattern. In Maharashtra, the builder/promoter has a clear choice either to float a co-operative society or  company and sell the flats on “dual ownership” under the 1963 Act or to make a declaration and sell the flat under 1970 Act and pass free and absolute title to each individual flat purchaser. The 1963 Act does not give title to the flat purchasers and hence there are certain difficulties in raising loan over them. This has resulted in the emergence of “dual ownership” where all the rights are  vested in the society or company. Under 1963 Act the right of occupation subject to bye-laws being vested in the member (flat purchaser) but it restricts the member to induct any third person except with permission of the society. The right of transfer of his interest in his flat exclusively
preserved by the society and the member is called tenant, though he has purchased a flat on ownership basis. This anamoly has given rise to lot of litigations in co-operative societies. This state of affairs must end. The flat purchaser who pays the full cost of the construction of the flat and his share of land is definitely entitled to get free and obsolete title of his flat, without any strings attached. It is desirable that a uniform law for the ownership of flats be enacted for the whole country just as the model rent control legislation brought by the centre for the whole country.

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VII. How to buy agricultural land

By Mukesh Joshi


Posted on 24th March 2001

INVESTMENT in the agricultural land, as a real estate, can rated prime amongst many available, property-options . Realty, citizen are getting into cultivates like horticulture, dairyming ,forestry and farming, the fascination and expectations. This trend is emerging and increasing steadily . The businessmen, industrialists, builders and financiers are plunging into this various activity , with unknown enthusiasm . Even upper middle class is ushering into this traded investment land. Some have already jumped into it and some others are ready to jump to it. “ Farm-owner” seems to the newest status-symbol. How to acquire this enchanting a enthralling status symbol? There is an attempt to provide sidelines to an incumbent deciding to be the owner of an agriculture land.

Agriculture and human life have direct nexus since times immemorial and every civilization has robbed and prospered amidstesh forestry and agriculture . The propriety of foodcrops, fruits, flowers, seeds beans , leave, herbs, wood, fodder, timber etc. products grown on the earth is innumerable and catering too! Mother Earth has in there for us , various mineral and rental deposits beneath and, various crops and plants on the surface to supplement human life. Man was an agriculturist first and progressed to today’s level therefrom. Agricultural has several branches which can be enumerated as follows :- 1) Horticulture

  1. Floriculture 3) Sericulture 4) vegiculture 5) Poultry-farming 6) Dairy Farming 7) Bee-keeping , etc.


 

Agriculture land and operations in Maharashtra are regulated by three pieces of legislation viz. 1)The Bombay Tenancy and Agriculture Lands Act, 1948 .2) The Maharashtra Land Revenue Code ,1966 & 3) The Maharashtra Agricultural lands (Ceiling on Holdings) Act, 1961. The legal terminology used in these legislations are briefly summarised here below for clearer understanding of the working and dealing later on.

The term “ Agriculture” carries the usual and popular meaning and includes horticulture too. Agriculture , thus , encompasses the raising of crops and grass and fruits and flowers, but it does not include allied pursuits like diary ,poultry , grazing , livestock-breeding and wood-cutting . However, the use of the land for the grazing of one’s own agricultural cattle abovestated definition should be applied to determine whether an activity or pursuit is Agricultural or otherwise.


 

The term “ land Revenue” means all sums or payments in money , received or legally climbable by or on behalf of the state Government from any person on account of any land or interest therein . The land revenue includescess , rate, premium, rent , lease-money ,quit rent , Judi or other fees and charges declared under any rule ,act, contract or scheme. Correspondingly, Non Agricultural Assessment Tax means the assessment tax fixed on any land put to use for a non-agricultural purpose.


 

Points to be considered, permissions to be obtained and documents to be prepared .

  1. 7/12 Extract: This the basic document of title and recording a record of rights herein the A-land survey no . with Hissa No., Ghat No., measurement of A. Land area , name of the owner/ hold/tenant along with the types of the crop taken. It is available from the Talathin of the village . A. model 7/12 extract is given alongside.

  2. 6 & 6/12 extracts: 6/12 extract denote s various mutation entries pertaining to different types of rights attached to or created or transferred to the legal heirs or other person in respect of particular land. It records how the A-Land has changed hands and what other rights are created on it. It is read in conjunction with the 7/12 extract.

  3. 8/A extract : This is in the form of a booklet containing therein the details of Payments of Land Revenue tax, types of crop taken , owner’s name , etc. Together with 7/12 & 6/12 extract, 8/A extract gives a full view of the title.

  4. Land Revenue Tax Receipts : They are issued to the agriculturists by the Talathin/ Tehsildar upon payment of Land-Revenue Tax and other cases if any.

  5. Part - Village-Map & Block Plan:- This is to be obtained to locate , identify and tally the location of the A-Land vis- a-vis the Physical location of the A-Land.

  6. Size, shape & dimensions of the plot:- There are to be noted with a particular view to determine and verify the access to the A-Land, existing or proposed . It should be tallied by an actual survey of the A-Land.

  7. Access road & Internal roads :-There are to be confirmed by inquires with the neighbours, revenue officers and the right of way for a particular piece of A-Land.

  8. Underground water search:- This can be carried out be a scientist or a water -diner and fix the point where to dig a well or a bore well for water supply.

  9. Rainfall & Temperatures:- These should be noted under .These should be noted and understood with reference to the proposed crops to be taken. Areas of hazardous climatic conditions should be avoided .

  10. Soil testing- This is very important in order to plan out the crop- pattern to be undertaken suitable to the qualities of the A- lands. This is done by government Agencies as well as private laboratories.

  11. Reservations or Acquisitions , if any:- Road and other public purposes by P.W.D. , zilla panchayata ,dam, water ,projects , canals, forest, industrial zone. Etc. to be inquired with different concerned authorities viz. BMRDA, corporation , panchayata, states government .

  12. Agricultural land ceiling :- categories of lands and respective limits to be ascertained and related. NOC to be obtained from the competent authority. The sale is always subject to and should confirm to the agricultural land ceiling act of the state Government .

  13. Original title deeds:- These should be thoroughly checked by the competent legal advisor to determine the clear and marketable title of the A- Land.

  14. Legal search report & public notice:- These are to be taken out to further investigate the title of the A-land under sale by an Advocate.

  15. Encumbrances , if any:- Bank or private party mortgagee, charge, lien, etc. to be ascertained and should be settled before the deal is finalised or the document is registered.

  16. Litigation at revenue courts, collector, mamlatdar, civil court or High court :-All the related paper should be studied to know the effect of these litigations on the title of the A-land under sale.

  17. Demarcation and survey and boundary :- DILR and circle inspector are the authorities to conduct an official survey of the A-land by proper demarcation.

  18. Disputes of boundary , if any:- These are essential to be sorted out and fix the Demarcation lines to know the exact boundaries form all sides.

  19. Claims of outsiders, if any :- Any karja/boja on A-land by the Agriculturist should be settled first before the conveyance of the A-land.

  20. Family disputes, if any:- There are to be know first and in advance to settle every concerned person’s individual and jointrights and interests before the payment is parted with .

  21. Sale -permissions , if required :- This should be obtained prior to the completion of the sale of A-land. Other wise the sale may be declared null and void.

  22. A-land belonging to cultivators:-This is also not saleable A-land . The collector or Revenue Tribunal doesn’t grant sale permissions to the cultivator to sell his land to anyone, usually. Therefore, A-land with Kul-holding u/s 32G should not be bought.

  23. A-land belonging to Adiviasi:- These should never be bought by a non-Adiviasi can only sell to another Adiviasi.

  24. Inami land :- Old conditions and new conditions are attached to such A-land and hence normally it is not advisable to buy such Inami land.

  25. N.M. Permissions, if necessary:- For a bungalow or a farm house, Farm-house rules are made out and accordingly , the permission should be obtained .

  26. An Agricultural only can buy an Agricultural land:- This is of paramount importance and hence only a farmer can acquire the A-land . A non farmer is not eligible to buy A-land without prior permission of the collector.

  27. Valuation report of A-land:- This should be obtained from the registered valuer and the agreement should be made keeping in view this report or there about .

  28. Agreement to sell:- This should be drafted, executed and registered by a competent Advocate putting there in all relevant terms and conditions .

  29. Power of Attorney :- This should be obtained form the Vendors to the Buyers for necessary follow up at various revenue offices and other persons.

  30. Indemnity Bond:- This is required in case , a certain condition is to be specifically fulfilled by the vendor in favour of the Buyer. A declaration -cum-Indemnity Bond should also be taken from the vendors , where necessary .

  31. Deed of conveyance:- This is to be , finally , executed duly stamp -duty paid.

  32. Registration of deed:- This conveyance must be duly registered with the registrar of assurances for the legal effect.

  33. New 7/12 extract shall , then , reflect the name of the new-owner, i.e. the buyer.

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Property Rates
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Reference:-Click here for India's oldest knowledge based newspaper on Real Estate

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VIII. For Non.Resident Indians

1. Non-resident Indians can freely purchase and sell residential and commercial properties in India. A foreign citizen of Indian origin does not have to obtain RBI's permission for purchasing and selling residential and commercial properties (other than agricultural/plantation land and farm house) for bonafide purposes provided the purchase is met through foreign exchange.

2. In such cases, a declaration has to be submitted to RBI within 90 days of the purchase.

3. Sale proceeds of not more than two residential properties and any number of commercial properties purchased by NRIs with foreign exchange funds and sold after at least 3 years can he repatriated after obtaining RBI's specific permission for the same up to the purchase amount made with foreign exchange funds.

4. Permission from RBI will have to be sought within 90 days of the sale of the property.

5. Giving and receiving gift of properties are freely permitted for Indian citizens.

6. A foreign citizen of Indian origin does not have to obtain RBI's permission for acquiring or disposing off gifts (up to two residential properties for receiving as gift) from or to a relative. (Charitable trust also for giving gifts)

7. The NRIs can freely let out their residential or commercial properties in India.

8. The rental income should however be routed through the NRO account. The rental income is freely repatriable from 1996-97 and is subjected to production of undertaking/certificate regarding payment of tax from the Income Tax authorities.

9. Non-resident Indians can avail housing loans from banks and housing finance institutions for an acquisition of one house/flat which is subjected to prescribed conditions.

10. At least 25% of the cost of acquisition should be met with foreign exchange funds.

11. The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from NRE/FCNR accounts maintained with banks in India.

12. They are required to file a declaration in form IPI 7 with the Central Office of Reserve Bank at Mumbai within a period of 90 days from the date of purchase of immovable property or final payment of purchase consideration along with a certified copy of the document evidencing the transaction and bank certificate regarding the consideration paid.

For Frequently asked Questions on NRI proceed to this Page

RBI Guidelines for FDI and ECB in Indian Real Estate

Question by Mr Prasad: Could you be kind enough to tell me if we can bring FDI in debt form in India in real estate sector under current RBI Guidelines under automatic route and if you can suggest few names to whom we can contact for this for detailed procedures and documentation etc?

 

Answer: I think when you say FDI in debt form, you meant to say: External Commercial Borrowing (ECB), because FDI (foreign direct investment) stands for investments rather than debt.

The finance ministry allowed External Commercial Borrowing (ECB) in Indian real estate projects (in 2005) involving integrated townships of 25 acres or 50,000 square metres of more. However, the RBI’s position has to be checked on a project by project basis. Its not right to give a general answer on this website - so that other readers don’t take wrong conclusions.

As per our understanding, the RBI allows ECB in real estate projects involving integrated townships of 100 acres or more.

As you maybe aware, in real estate projects, significant capital is required upfront for land acquisition, which is classified as working capital. But end-use restrictions like not allowing ECB money to be used for working capital mean that Foreign funds (as debt) can’t be applied everywhere in Indian Real Estate.

RBI guidelines are often related to type and scale of the project. So if you are planning a large infusion of debt capital then please check RBI guidelines at a micro level.  Our team of legal real-estate experts could offer detailed help on specific cases. Feel free to contact us or ask any other questions.

How can USA residents participate/invest in the India-Real-Estate through purchase of ETF’s or ADR’s?

Based on limited information available, and Without going into details, among ETFs, there are three that invest in Indian companies, two of which are Nasdaq listed (the BLDRS Emerging Market 50 ADR Index Fund and the BLDRS Asia 50 ADR Index Fund). The other ETF is listed on the Amex and is linked to the iShares MSCI Emerging Markets Index. Part of this might be in real estate. Unfortunately there are no India real estate companies listed in American markets. But there are a few like BSEL, Indiabulls real estate listed in Luxembourg markets.

On a positive side, there might be a few more companies that will be coming up with ADR’s but for that keep looking at this site

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Real Estate Investment for NRIs

Rajkumar S. Adukia

Chartered Accountant

radukia@vsnl.com

 

Investing in immovable prop
erties in India is not a
Herculean task for the NRIs anymore. We have come a long way from the days of FERA (Foreign Exchange Regulation Act) regime, when buying or selling of immovable property was governed by the citizenship of a person. According to an estimate, about 25 million NRIs are looking at home country for potential investment opportunities in real estate. The FDI under automatic route in real estate development has also augmented the confidence of overseas Indians to forge strategic alliances with global realty giants for testing select markets across the country. Before we go into the details of the law governing NRI investment in real estate, let us first understand the basic definitions.

Who is an NRI?

Section 2 of the Foreign Exchange Management Act, 1999 (FEMA) deals with various definitions. It defines a person resident in India and a person resident outside India. However, it does not define the term non-resident nor it does define the term Non Resident Indian (NRI).

However, Notification No. 5/2000-RB (dealing with various kinds of Bank Accounts) defines the term Non Resident Indian (NRI) to mean a person resident outside India who is either a citizen of India or is a person of Indian origin. In short, the definition of the term NRI is contextual and can have slightly different connotations for FEMA/Income Tax/Acquisition of Immovable Property etc.

A Non-Resident Indian is termed as a "person resident outside India". The non-resident Indians are classified into three categories

(1) Non-resident Indian Nationals. (2) Non-resident Indians of Indian Origin/Persons of Indian Origin And (3) Overseas Corporate Bodies (OCB)

Non-Resident Indian National (NRI)

An Indian Citizen who stays abroad for employment/carrying on business, to pursue a vocation outside India or under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident. (Persons posted in U.N. organisations and officials deputed abroad by Central/State Governments and Public Sector undertakings on temporary assignments are also treated as non-residents). Non-resident foreign citizens of Indian Origin are treated on par with non-resident Indian citizens (NRIs) for the purpose of certain facilities.

Person of Indian Origin (PIO)

For the purposes of availing of the facilities of opening and maintenance of bank accounts and investments in shares/securities in India, Person of Indian Origin means a citizen of any country other than Pakistan or Bangladesh if,

(i) he at any time, held an Indian passport

(ii) he or either of his parents or any of his grand parents was a citizen of India by virtue of the Constitution of India or Citizenship Act, 1955 (57 of 1995)

(iii) the person is a spouse of an Indian citizen

For investments in immovable properties, Person of Indian Origin means an individual (not being a citizen of Pakistan or Bangladesh or Afghanistan or Bhutan or Sri Lanka or Nepal or China or Iran)

(i) who at any time, held an Indian passport

(ii) who or either of whose father or whose grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955)

A person who is a non-resident can belong to the following categories:

Overseas Corporate Bodies (OCB)

Overseas Corporate Bodies (OCBs) are bodies predominantly owned by individuals of Indian nationality or origin resident outside India and include overseas companies, partnership firms, societies and other corporate bodies which are owned, directly or indirectly, to the extent of at least 60% by individuals of Indian nationality or origin resident outside India, as also overseas trusts in which at least 60% of the beneficial interest is irrevocably held by such persons. Such ownership interest should be actually held by them and not in the capacity as nominees. The various facilities granted to NRIs are also available with certain exceptions to OCBs as long as the ownership/beneficial interest held in them by NRIs continue to be at least 60%.

Key Acts Governing Acquisition of Immovable Property in India by NRIs

(i) The Foreign Exchange Management Act, 1999 is the one that regulates foreign investment in India. Under this umbrella Act, Foreign Exchange Management (Acquisition and Transfer of Immovable Properties) Regulations, 2000 has been enacted vide Notification No. FEMA 21/2000-RB dated 3rd May 2000. FERA vs. FEMA

There is a major transformation in the protocol as far as regulation concerning immovable property situated in India is concerned. Under FERA acquisition of immovable property in India was governed by "citizenship criteria", whereas under FEMA the same is governed by "residential status" criteria. It means a foreign citizen who is resident in India (not being a citizen of any of the eight countries listed above) can purchase immovable property in India without any approval from RBI. He is also not required to file any declaration at the time of purchase of such immovable property.

Prohibition on citizens of certain countries

Citizens of eight countries, (namely, Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal. or Bhutan (whether resident in India or not) are debarred from acquiring or transferring any immovable property in India without prior approval of the RBI. However, such a prohibition is not applicable to immovable property acquired on lease for a period not exceeding five years.

General Prohibition

Investment in agricultural property, plantation and farmhouse is prohibited for all classes of persons resident outside India, be it NRIs/OCBs/ foreign citizens or other foreign entities.

Acquisition of immovable property

Acquisition of immovable property by an NRI can be by way purchase, gift or inheritance

Acquisition by way of purchase

A general permission is available to NRIs or PIO to purchase only residential/ commercial property in India. There is no restriction on the number of residential/commercial properties that an NRI or a PIO can buy. The name of a foreign national of non-Indian origin cannot be added as a second holder of a residential/commercial property purchased by an NRI or a PIO.

A foreign national of non-Indian origin, resident outside India, cannot acquire any immovable property in India by way of purchase without RBI’s approval. However, a foreign national of non-Indian origin, including a citizen of the eight countries mentioned above, may acquire only residential accommodation on lease, for not more than five years.

He does not require the RBI’s permission for this. A person resident outside India (that is, an NRI, a PIO or a foreign national of non-Indian origin) cannot acquire agricultural land/plantation/farm house in India by way of purchase.

Acquisition by way of gift

An NRI or a PIO may acquire residential/commercial property by way of gift from a resident of India, an NRI or a PIO. However, a foreign national of non-Indian origin resident outside India cannot acquire residential/commercial property in India by way of gift. A person resident outside India cannot acquire agricultural land/plantation/farm house in India by way of gift.

Acquisition by way of inheritance

A person resident outside India can hold immovable property in India acquired by way of inheritance from a person resident in India. Further, with the approval of the RBI, he may hold immovable property in India acquired through inheritance from a person resident outside India, provided the bequeathor had acquired the property in accordance with FEMA or the foreign exchange law in force at the time of acquisition.

Sale of immovable property

An NRI can sell residential/commercial property in India to a person resident in India, an NRI or a PIO. However, a PIO can sell residential/commercial property in India only to a resident of India. He would need prior approval of the RBI for sale of residential/commercial property in India to an NRI or a PIO.

A foreign national of non-Indian origin whether resident in India or outside India would require prior approval of the RBI for sale of residential property in India acquired with the specific permission of the RBI to a person resident in India or outside India.

An NRI or a PIO may sell his agricultural land/plantation/ farm house in India to an Indian citizen resident in India. However, a foreign national of non-Indian origin, resident outside India, would require prior approval of the RBI to sell agricultural land/plantation/farm house acquired in India.

Gift of immovable property in India

An NRI or a PIO may gift residential/commercial property in India to a person resident in India, an NRI or a PIO. Further, an NRI or a PIO may gift agricultural land/plantation/farm house in India to an Indian citizen resident in India.

However, a foreign national of non-Indian origin resident outside India would need prior approval of the RBI to gift agricultural land/plantation/ farm house acquired by him in India.

Purchase/ Sale of immovable Property by Foreign Embassies/Diplomats/Consulate Generals

Foreign Embassy/Diplomat/Consulate General has been allowed to purchase/ sell immovable property in India other than agricultural land/ plantation property / farm house provided

(i) clearance from Government of India, Ministry of External Affairs is obtained for such purchase/ sale, and

(ii) the consideration for acquisition of immovable property in India is paid out of funds remitted from abroad through banking channel.

Acquisition of immovable property for carrying on a permitted activity in India (Regulation 5)

A person resident outside India who has established a liaison office in India in accordance with FEMA regulations cannot purchase immovable property in India. Practically, all liaison offices in India acquire premises on lease for not more than five years for which no permission is required from the RBI.

However, a person resident outside India who has established a branch office or other place of business in India in accordance with FEMA regulations can purchase immovable property in India provided it is necessary for, or incidental to, carrying on the activity he is engaged in and all applicable laws have been complied with.

Such an entity/concerned person would have to file a declaration in form IPI with the Reserve Bank, within ninety days from the date of such acquisition. The non-resident is eligible to transfer by way of mortgage the said immovable property to an Authorised Dealer as a security for any borrowing.

Sale proceeds

As far as repatriation of sale proceeds is concerned, such repatriation in respect of properties acquired by the person while being a resident of India or acquired by inheritance from a person who is resident of India, can only be effected with the prior permission of the Reserve Bank of India.

In the event of sale of properties other than agricultural land / farm house / plantation property in India by a person resident outside India who is a citizen of India or a person of Indian origin, the authorised dealer may allow repatriation of sale proceeds outside India subject to the condition that the immovable property was acquired by the seller in accordance with the provisions of foreign exchange law in force at the time of acquisition or the provisions of FEMA and the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations 2000 and the amount to be repatriated does not exceed the amount paid for acquisition of the immovable property in foreign exchange received through normal banking channels or out of funds held in Foreign Currency Non- Resident Account or the foreign currency equivalent as on the date of payment, of the amount paid where such payment was made from the funds held is Non- Resident External Account for the acquisition of the property concerned. Repatriation can be made for a maximum of two residential properties.

The repatriation of sale proceeds has been restricted to US $ 1 Million per calendar year if properties are acquired from rupee sources by way of inheritance or legacy. This repatriation can be done out of the sale proceeds received from sale of property acquired from rupee sources subject to the condition that the property should have been cumulatively held for a minimum period of 10 years. Further the repatriation is restricted to the amount of foreign exchange remitted by way of inward remittances/NR/FCNR account. However, there is no lock-in period in respect of immovable property acquired by way of inheritance/legacy.

The only significant restriction that exists is with respect to PIOs who are citizens of Pakistan, Bangladesh or Sri Lanka, China, Afghanistan or Iran. These PIOs need to obtain prior approval of the Reserve Bank of India with documentary evidence in support of inheritance and tax clearance/no objection certificate from the Income-tax authorities.

Yet another rule exists with respect to the number of residential properties that can be repatriated. In case of residential units, the restriction is two and for commercial properties, there is no limit. However, rental income is freely repatriable since it is a current account transaction.

Interest or share in a Co-operative Housing Society or Apartment Owners Association

Though the word "immovable property" has been widely used in FEMA, no where does it define the term. Further, even the definition of "immovable property" given in the Transfer of Property Act, 1982, the General Clauses Act, the Sale of Goods Act and the Indian Registration Act, taken together, do not clarify what "immovable property" is. They only suggest what is either included or not included in "immovable property". In fact, in the above Acts, shares in the co-operative society are not so included in the definition of the term "immovable property".

However, the Supreme Court of India has made its definition clear in the case of Hanuman Vitamin Foods Pvt. Ltd. v/s State of Maharashtra (2000) 6 see 345, confirming the Bombay High Court decision in Hanuman Vitamin Foods Pvt. Ltd. & Ors v/s. State of Maharashtra & Superintendent of Stamps, Bombay (Writ Petition Number 1820 of 1986, dated 17th February, 1989). The matter of contention in this case was whether the instrument of transfer of shares in a co-operative society was an instrument for transfer of an immovable property, for purposes of levy of stamp duty thereon. The Supreme Court held, by referring to another decision in Veena Hasmukh Jain v/s. State of Maharashtra (1999) 5 SCC 725, that the agreement to sell shares in a Co-operative Society is, in effect, the agreement to sell immovable property.

Accordingly, any interest or share in a Co-operative Housing Society or Apartment Owners Association (also known as Condominium abroad) is an immovable property for the purposes of these Regulations.

Repatriation of Rental Income

NRI/PIOs can freely rent out their immovable property, whether purchase through application of forex or otherwise, without seeking any permission from the RBI. The rental income being a current account transaction is repatriable outside India, only if proper tax is paid or provided for.

Where the house is purchased through housing finance and if the house is rented out, the entire rental income, even if it is more than the prescribed installment, should be adjusted towards repayment of the loan. If the rental income is less then the prescribed installment, the borrower should remit the amount of the extent of the shortfall from abroad or pay it out of his NRE, FCNR or NRO account in India.

Refund of Purchase consideration on account of non­-allotment of flats/plots/cancellation of booking/deals in respect of immovable property purchased by NRIs/PIOs in India

Authorised Dealers are permitted to credit refund of application/earnest money/purchase consideration made by the housing building agencies/seller on account of non-allotment of flat/plot cancellation of bookings/deals for purchases of residential, commercial property, together with interest, if any (net of income tax payable thereon), to NRE/FCNR account, of Non-­Resident Indian/Persons of Indian Origin provided, the original payment was made out of NRE/FCNR account of the account holder or remittance from outside India through normal banking channels and the authorised dealer is satisfied about the genuineness of the transactions (refer to A.P. (DIR Series) Circular No.46 dated November 12, 2002).

Loans for acquisition of immovable property

Reserve Bank has granted general permission to certain financial institutions providing housing finance e.g. HDFC, LIC Housing Finance Ltd., etc., to grant housing loans to NRIs for acquisition of a house/flat for self occupation subject to certain conditions. The purpose of loan margin money and the quantum of loan will be at par with those applicable to housing loans to residents. Repayment of loan should be made within a period not exceeding 15 years out of inward remittances or out of funds held in the investor’s NRE / FCNR / NRO Accounts.

Apart from housing finance institutions, authorised dealers have also been granted permission to grant housing loans to NRIs for acquisition of a house/flat for self occupation subject to the same conditions as housing finance institutions.

Authorized dealers can also grant housing loan to NRIs where he is a principal borrower with his resident close relative as a co-applicant / guarantor or where the land is owned jointly by such NRI borrower with his resident close relative. Such housing loans availed in rupees can also be repaid by the close relatives of the borrower in India (Please refer to Regulation 8 of Notification No.FEMA 4/2000-RB dated May 3, 2000 and A.P. (DIR. Series) Circular No.95 dated April 20, 2003 and A.P. (DIR Series) Circular No.94 dated May 25, 2003).

Loan against the security of immovable property

An NRI can borrow against the security of immovable property from Authorised Dealer subject to following conditions:

i) The loan should be used for meeting the personal requirements or for borrower’s own business purposes; and

ii) Loan should not be used for prohibited activities, namely;

(a) Business of chit fund, or

(b) Nidhi Company, or

(c) Agriculture or plantation activities or in real estate business, or construction of farm houses, or

(d) Trading in Transferable Development Rights (TDRs),

iii) The loan amount cannot be remitted outside India,

iv) Repayment of loan shall be made from out of remittances from abroad or by debit to NRE/FCNR/NRO account or out of the sale proceeds of shares or securities or immovable property against which such loan was granted. (Please refer to Schedules 1 and Schedules 2 to Notification No.FEMA 5/2000-RBI dated May 3, 2000)

Availing housing loan in rupees from the employer

A NRI can avail housing loan in rupees from his employer subject to the terms and conditions mentioned in Regulation 8A of Notification No.FEMA 4/2000-RB dated May 3, 2000 and A.P. (DIR Series) Circular No.27 dated October 10, 2003.

Investment in Housing and Real Estate Development (10C. 13 of Exchange Control Manual)
RBI has given permission to NRIs/OCBs to invest on repatriable basis upto 100% in the new issues of equity shares/convertible debentures by an existing or new company engaged or proposing to engage in the following activities:

§ Development of service plots and construction of built- up residential premises;

§ Real estate covering construction of residential and commercial premises including business centres and offices;

§ Development of townships; City and regional level urban infrastructure facilities, including roads and bridges;

§ Manufacturing of building materials; and Financing of housing development.

Repatriation of original investment will be permitted after a lock in period of three years from the date of issue of the equity shares/convertible debentures. Annual dividend on equity shares/interest on debentures can, however, be freely repatriated, subject to payment of applicable taxes. In case of OCBs, net profit (upto 16%) arising from the sale of such investment after the lock-in period of three years can also be repatriated.
The RBI permission is not required for acquiring/ holding or transfer/disposal of immovable properties by Indian citizens’ resident outside India. Indian citizens holding immovable property in India but who acquire foreign citizenship at a later date are required to take permission from the RBI for continuing to hold the immovable properties.

The facilities are granted to OCBs so long as the ownership/beneficial interest held in them by persons of Indian nationality/origin resident outside India continues to be at least 60 per cent. To ensure this, the OCBs have to furnish a certificate from an overseas auditor/chartered accountant/certified public accountant in form OAC/OAC-1, at the time of applying for the facility for the first time and thereafter as and when required by Reserve Bank/authorised dealers. The overseas auditor/chartered account/certified public accountant has to certify that the ownership interest in the OCBs is held by NRIs. The documentation accompanying Form OAC/OAC-1 have to clarify that the interest held by persons of Indian nationality/origin in the OCB is actually held by such persons and is not held by them in the capacity as nominees.
Provisions regarding PAN

As per Rule 114B(a) of the Indian Income Tax Rules 1962, a person has to quote his PAN in all documents for the sale or purchase of any immovable property valued at Rs 5,00,000 or more. But as per Rule 114C of the rules, an NRI need not apply for and obtain PAN for any transaction regarding the sale or purchase of immovable property.

The non-residents who are filing the Return of Income may be allotted PAN by the Assessing Officer under section 139A (2) of the Income-tax Act. However, if PAN is not allotted he should apply to obtain P.A.N.

The non-residents are exempt from obtaining the PAN under section 139 A (8) (d) of the Income-tax Act. It is advisable to obtain PAN by non-residents who are filing the Return of Income. For others, they may apply for it for the sake of convenience.

Also, procedurally the Income-tax department is not accepting the Returns of Income from any person who has not obtained or applied for PAN. Hence, one may submit PAN application along with his Return of Income.

Wealth Tax Planning

Wealth tax is payable only on non-productive assets, like motor cars, farmhouses, vacant land, jewellery, etc., over and above the minimum exemption limit of Rs. 15 lakh. Thus, it is possible to not pay any wealth tax at all even after possessing assets of crores of rupees; as long as one’s non-productive assets do not surpass Rs. 15 lakh. Other than that, a taxpayer may own unrestrained value of shares, bank deposits, units, commercial property, industrial property, etc. without paying any wealth tax.

No wealth tax is payable on his foreign assets and the tax is payable on net taxable wealth which is arrived at after deducting the debts and liabilities related to the taxable assets. The items of wealth which are either totally exempt from wealth tax and or which are so exempt from wealth tax up to a particular limit are deducted from the gross wealth to arrive at the taxable wealth on the valuation date. Generally speaking, the value of assets on the valuation date as per PART B III Schedule to the Wealth Tax Act is taken for the purpose of computation of wealth tax payable by a non-resident individual. Hence, a non-resident should so plan his investments in India that he secures the maximum deductions and exemptions in a manner that he is liable to least possible wealth tax.

Broadly speaking the exemption in respect of wealth tax could be classified under two headings, namely:

(i) Items which are excluded from the definition of ‘‘Assets’’ [as per the definition of "assets" given in Section 2 (e a) of the Wealth Tax Act, 1957].

(ii) Specific exemptions regarding certain other assets [Section 5 of the Wealth Tax Act, 1957]

Wealth Tax Exemptions

In case of NRIs having any of the following assets, the same are not taxable in the hands of NRI under Section 5 of the Wealth Tax Act, 1957

(i) One house property or

(ii) One plot of land provided area is less than 500 square meters or less.

In addition to the above, OVERSEAS ASSETS held by NRI is also exempt Under Section 6 of Wealth Tax Act, 1957.

Specific exemption for an NRI returning India

Where an NRI/PIO returns to India for permanent residence, the money and the value of assets brought by him into India and the value of assets acquired by him out of such money within one year immediately preceding the date of his return and at any time thereafter are totally exempt from wealth tax for a period of seven years after return to India.

The liability of a non-resident Indian to wealth tax in India is explained by way of the following two examples:

Example 1

Amit, a non-resident Indian, has bought urban land and jewellery worth Rs. 20 lakh. He has Rs. 40 lakh in bank deposit and other bank accounts, as on 31 March 2006. The wealth tax payable by Amit on the net wealth as on the valuation date of 31 March 2006 relevant to the assessment year 2006-2007 will be computed only on Rs. 20 lakh - Rs. 15 lakh (exempted), i.e. on Rs. 5 lakh as the amount of Rs. 40 lakh, being deposits in bank is exempt. The wealth tax is computed @ 1% on Rs. 5 lakh = Rs. 5,000.

Wealth Tax Rates

In case of NRIs, Wealth Tax is leviable at par with resident.

The Tax rate is 1% of net wealth subject to basic exemption of Rs. 15,00,000/- (Rupees Fifteen Lakhs).

Capital Gains on Transfer of Immovable Property

The profit on sale of capital asset is treated as capital gains. The capital assets (which are not held as stock-in-trade) are Shares, Debentures, Government securities, Bonds, Units of UTI and Mutual Funds, Immovable property etc.

The capital gains are segregated into long-term capital gains and short- term capital gains in following manner: -

Capital Asset Short-term Long-term

Equity shares, and listed securities ,Units of Unit Trust of India or Mutual Funds.If held for a period not exceeding 12 months from the date of acquisition. Capital asset which is not a short-term capital assets is long-term capital asset

All other investments and immovable property. If held for a period not exceeding 36 months from the date of acquisition. Capital asset which is not a short-term capital assets is long-term capital asset

Cost of acquisition:

Cost of acquisition in case of long term capital assets other than Specified Assets means Indexed Cost of Acquisition.

Indexed Cost of Acquisition:
For long term capital assets other than Debentures and Bonds (except capital index bonds issued by the Government), the Cost of acquisition means Indexed Cost of Acquisition The system helps you to claim higher cost than actual cost of acquisition. The term "indexed cost of acquisition" is the amount which bears, to the cost of acquisition, the same proportion as cost inflation index for the year in which the asset is transferred bears to the cost inflation index for the first year in which the asset was held by the assessee or for the year beginning on April 1, 1981, whichever is later.

(i) Long Term Capital Gains - Immovable Property held for more than 3 years

This section deals with

1. Long Term Capital Gain i.e., assets held for more than 36 months and in case of shares and securities more than 12 months.

2. It applies to all Immoveable properties and other assets.

3. Capital Gain will arise at the time of transfer i.e., sale, exchange, relinquishment etc.

4. Long Term Capital Gain shall be computed by considering Indexed cost of acquisition and Indexed cost of Improvement.

(ii) Short term Capital Gains-Immovable Property held for less than 3 years

This section deals with

1. Short Term Capital Gain i.e., gain arises from assets held for not more than 3 years.

2. It applies to all short term assets except shares and debentures of Indian Company. For shares and debentures holding period is not more than 12 months.

3. Capital Gain will arise at the time of transfer i.e., sale, exchange, relinquishment etc.

4. In this case, benefit of Indexation is not available.

Exemptions available on re-investment

NRIs are entitled to claim exemption from capital gains tax if they reinvests (within 6 months of sale) long-term capital gains into following assets:

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FOREIGN EXCHANGE MANAGEMENT ACT (FEMA)

 

And

BUYING AND SELLING OF IMMOVABLE PROPERTY IN INDIA

1. Foreign Exchange Management Act, 1999 has come into force from 1st June, 2000 replacing the earlier Act of Foreign Exchange Regulation Act, 1973.  The Reserve Bank of India had made regulation under clause (1) of sub section (3) of Section 6, sub section (2) of Section 47 of FEMA with regard to “Foreign Exchange Management (Acquisition & Transfer of Immovable Property in India) Regulation 2000.  Before we deal with the said Foreign Exchange Management Acquisition and Transfer of Immovable Property in India) Regulation 2000, it is necessary to know certain definition under FEMA.  Section 2 of FEMA gives various definitions of the words used in the said Act which are also applicable to the said Regulation.  Some of them which are relevant for this Article are as under :-

 

Section 2(v) – Person resident in India means –

(i)  a person residing in India for more than one hundred and eighty two days during the course of the preceding financial year but does not include -

(A)  a person who has gone out of India or who stays outside India, in either case -

(a)   for or on taking up employment outside India, or

(b)  for carrying on outside India business or vocation outside India, or

(c)  for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period;

(B)  a person who has come to or stays in India, in either case, otherwise than -

(a)     for or on taking up employment in India, or

(b)    for carrying on in India a business or vocation in India, or

(c)    for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period;


(i)      
any person or body corporate registered or incorporated in India;

(ii)      an office, branch or agency in India owned or controlled by a person resident outside India,

(iii)    an office, branch or agency outside India owned or controlled by a person resident outside India,

(iv)      an office, branch or agency outside India owned or controlled by a person resident in India.

 

Section 2(w) –  person resident outside India means  a person who is not resident in India.

  Under the said Regulation 2000, Regulation 2(c) defines a person of Indian origin which reads as under :

“a person of Indian origin’ means an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan), who

(i)   at any time, held Indian passport;

or

(ii) who or either of whose father or whose grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955).

 

The aforesaid 3 definitions are vitally important as far as the application of the said Regulation 2000 is concerned.

2.   We shall divide them into following categories : 

(a)     A person who is a citizen of India and resident of India,

(b)    A person who is citizen of India but resides outside India,

(c)    A person who is of Indian origin but resides outside India.

 

(a) A person who is a citizen of India and also resident of India does not need any permission for the purpose of acquiring or selling any immovable property.  There is no provision or restriction made with regard to Indian citizens who are residents of India as far as the transactions of immovable properties are concerned.

(b) A person who is a citizen of India but resident outside India – He

(i) may acquire any immovable property in India other than agricultural/plantation/farm house.

(ii) transfer any immovable property in India to a person resident in India, and

(iii) transfer any immovable property other than agriculture or plantation property or farm house to a person resident outside India who is a citizen of India or a person of Indian origin resident outside India.  Such a person can acquire any immovable property in India except agriculture/plantation/farm house.  He can also sell any immovable property to the residents in India.  This will include agriculture/plantation/farm house, if it belongs to him.  There is no restriction on transfer of agriculture/plantation/farm house so far as he does so in favour of residents in India.  Such a person can also transfer immovable property other than agricultural/plantation/farm house to any person who is a citizen of India but resident outside India or to a person of Indian original resident outside India.  In other words if the purchaser is citizen of India or of Indian origin, even though he is resident outside India, such a person can transfer immovable property other than agriculture/plantation/farm house to such an Indian citizen or person of Indian origin.  Such a person cannot transfer any immovable property to a person who is neither a citizen of India nor of Indian origin if he resides outside India.  A person who reside in India even though he may not be a citizen or of Indian origin can be transferee of property from such a person.

 

(c)  A person of Indian origin who is a resident outside India -

(i)  He may acquire immovable property other than agricultural land/farm house/plantation property in India by purchase from, out of (a) funds received in India by way of inward remittance in any place outside India or (b) funds held in any non-resident account maintained in accordance with the provisions of the Act and the Regulation made by the Reserve Bank under the Act.  In other words, such a person can acquire any immovable property other than agricultural land, etc. provided funds are inward remittance from out of India or fund held in non-resident account.  Except the aforesaid two funds, such a person cannot use any other fund for acquiring immovable property in India.

 

(ii) He may acquire any immovable property in India other than agricultural land/farm house/plantation property by way of gift from a person resident in India or from a person resident outside India who is a citizen of India or from a person of Indian original resident outside India.  Such a person can receive immovable property as a gift from the following categories :  (i) a person resident in India, (ii) a person resident outside India but a citizen of India, and (iii) a person resident outside India but of Indian origin.  Therefore, such a gift of immovable property cannot be accepted by such a person from a person who is neither a citizen of India nor of Indian origin if he is resident outside India.

 

(iii)  He may acquire any immovable property in India by way of inheritance from a person resident outside India who has acquired such property in accordance with the provisions of Foreign Exchange Law in force at the time of acquisition by him or the provisions of this Regulation or from a person resident in India.  One more way of acquiring such property by such a person is by way of inheritance.  But he can get the property by inheritence provided the deceased was (i) a person resident in India (it does not matter whether he is a citizen or not or whether he is of the Indian origin or not), (ii) the deceased had acquired the property as per the regulation than prescribed at the time of acquisition by him or present Regulation 2000.  Here there is no exception of agricultural land/farm house/plantation property.  Such property can also be inherited provided the aforesaid conditions are fulfilled.

 

(iv)  Such a person can transfer any immovable property other than agricultural land/plantation property/farm house by way of sale to a person resident in India.  Such a person cannot sell agricultural land, farm house or plantation property to any person.  However, in case of other immovable property, he can only sell the said property to a person who is resident in India.  A person who is not of resident of India cannot  purchase from such a person any immovable property.  

 

(v)  He can transfer agricultural land/farm house/plantation property in India by way of gift or sale to a person resident in India who is a citizen of India.  Such a person can sell or gift even the agricultural land/farm house/plantation property provided the purchaser or donee is Indian citizen who is resident in India.  A person who is resident outside India or a person who is not a citizen of India cannot be a purchaser or donee from such a person.  Both the conditions are required to be complied with, i.e. he has to be a citizen of India and he is to be resident of India.  In short, the purchaser or donee of agricultural land, etc. from such a person has to be  Indian citizen who is resident of India.

 

(vi)  He can transfer residential or commercial property in India by way of gift to a person resident in India or to a person resident outside India who is a citizen of India or to a person of Indian origin but resident outside India.  Such a person can gift immovable property as well as agricultural land, etc. to a person (i) who is a resident in India, or (ii) to a person resident outside India but who is a citizen of India, or (iii) to a person of Indian origin resident outside India.  In short, if one is a citizen of India or of Indian origin or resident in India, then he can be a donee of a gift of immovable property from such a person. 

 

3. There is a specific provision meant for acquisition of immovable property for carrying on a permitted activity.  A person resident outside India who has established in India in accordance with the Foreign Exchange Management (has established in India of branch or office or other place of business) Regulation 2000, a branch office or other place of business for carrying on in India any activity, excluding liaison office , may, acquire any immovable property in India, if it is necessary or incidental to carrying on such activity provided all applicable rules, regulations or directions for the time being in force are duly complied with and the person/s files with the Reserve Bank a declaration in Form IPI not later than 90 days from the date of such acquisition.  In other words a person may not be a citizen of India, may not be of Indian origin, but he has opened a branch or office or other place of business for carrying on in India any activity (excluding liaison office) even though he is a person resident outside India, can acquire any immovable property which is necessary for or incidental to carrying on such activity.  It will be, however, subject to two conditions (i) it must comply with applicable law, rules, regulations and directions, and (ii) filling a declaration in prescribed form not later than 90 days from the date of such acquisition.  Such a person can also transfer to an authorised dealer by way of mortgage  as a security for any borrowing the immovable property acquired which was necessary for or incidental to carrying on such activity.

4. However, there is complete prohibition on acquisition of immovable property in India by citizens of Pakistan Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan without prior permission of the Reserve Bank except in a case of lease not exceeding five years.  Citizens of these countries can neither purchase nor sell immovable property without permission of the Reserve Bank even though they may be residents of India.  They may take on lease or grand lease of immovable property in India but not exceeding a period of five years.

5. There is overall restriction on a person who is resident outside India as to transfer of any

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IX. TAXATION AND REAL ESTATE INVESTMENT

Income Tax : Deduction for interest on housing loan

By S.K. Agarwal

Q. Who can claim deduction for interest on housing loan ?
A. A person may claim deduction from income (under the head “house property”) for interest payable in India on housing loan, if such loan is taken for acquiring, constructing, reconstructing, repairing or renovating a property. However, if the property is used for business carried on by the assessee, he may claim deduction for such interest from income under the head “business or  profession”. In both cases, property would include residential as well as commercial property.

Q. Is it necessary that the loan should be taken only from housing finance companies ?
A. No, it is not necessary that the loan should be taken only from housing finance companies. One may take loan from any company or person, even from family members.

Q. Can the loan be taken for renovation or repairs of the house ? Can interest be allowed for purchasing an open plot of land ?
A. Loan can be taken for renovation or repairs of the property. But if taken for purchasing an open plot of land, interest may be allowed only if construction of property is started on it, such interest to be deducted after the construction is completed. But if open plot is purchased in the name of an existing business, interest may be allowed under the head “business income” in the respective year even if construction is not commenced.

Q. Is it possible to take a fresh loan taken at lower rate to repay the earlier loan taken at higher rate of interest ?
A. Yes, a fresh loan taken to repay earlier loan which was taken for acquiring, constructing etc, of the property is eligible for deduction of interest as discussed above.
 

Q. How much amount is allowed ?
A. If the property is either let out or used for assessee’s own business, then the entire amount of interest is deductible. But if the property is used by the assessee for his own residence or for the residence of his family, then the deduction of interest is subject to a ceiling limit. This limit was Rs. 10,000/- for assessment years 1995-96 and 1996-97 and Rs. 15,000/- for A.Y. 19997-98 and 1998-99. From A.Y. 1999-2000, the limit has been raised to Rs. 30,000/-. These new limits apply for not only new loans but also the existing loans taken earlier and new as well as old properties. The ceiling limit for deduction of interest is raised to Rs. 75,000/- by the Finance Act, 1999, with effect from 1st April 2000 applicable to the current financial year (A.Y. 2000-2001). But this new limit is applicable in only such cases “where the property is acquired or constructed with capital borrowed on or after the 1st day of April, 1999 and such acquisition or construction is completed before the 1st day of April 2001”. Another point to remember is that while computing income under the head “house property”, interest is deducted only after completion of construction of the Property. As regards the interest pertaining to earlier period i.e. for the period of construction, it is allowed in five years commencing from the year in which construction of the property is completed. However, in case of self occupied property, this interest is also subject to the ceiling limit as
mentioned above.

Q. Can the interest paid by set off against the other income ?
A. Yes, if because of the payment of interest, there is loss under the head “house property”, such loss can be set off against the other income of the assessee for that year.

Q. In case of salary, can the employer consider this interest payment for TDS ?
A. If a person having salary income takes housing loan for self-occupied house, payment of interest on such loan can be taken into account by the employer for deduction of tax from salary.

Court Judgments on Income Tax related with property

1. Madras High Court
Purchase of immovable property by Govt. – Principles of Natural justice must be followed – Opportunity to be heard must be given before passing order U/s 269 UD – Reasons for passing order may be recorded separately but the order would be incomplete unless either reasons are incorporated in the order of are served separately along with the order on affected party – Reasons for order must be communicated to the affected party – Income Tax  1961 Se. 269 UD.
GOVERNMENT OF INDIA AND ANOTHER
Vs.
MAXIM A LOBO AND ANOTHER (190 – ITR – 101)

2. (In the Andhra Pradesh High Court)
Mrs. Sooni Rustom Mehta and others
Vs.
Appropriate Authority Income Tax Department. (191 – ITR 290)
M. JAGANNDHA RAO and J.ESWARA PRASAD J.J. Acquisition of immovable property – deposit of consideration with Appropriate Authority – condition – precedent – Dispute regarding title to receive consideration – Meaning of “DISPUTE” and “TITLE” – Write Petition challenging rires of provisions – Amounts to dispute regarding title to receive consideration – Deposit of consideration with Appropriate Authority – valid – Income Tax Act 1961 U/s 269 UG.

3. Acquisition of Property (191 – ITR – {ST}3)
Appropriate Authority : Scope of powers
8.7.1991 : Their lordship M.N. Venkatachaliah and N.M. KASHIWAL J.J. dismissed following the dismissal of S.L.P. (Civil) No. 6304 of 1991 on 23.4.1991 (Sec.189 ITR (ST) 120) a Special leave petition by the Department to appeal against the judgement dated 14.12.1990 of the Delhi High Court in C.W. No. 47 of 1990 ITR 656 whereby the High Court allowed the assessee’s writ petition holding that the Appropriate Authority had the option either to acquire the property sought to be transferred or to issue a no objection certificate and that if any other law was being violated it was for the proper authorities under that law to take action : Appropriate Authority V Sawant Narang : SLP (Civil) No. 11817 of 1991.

4. (In the Supreme Court of India). Appropriate Authority and another Vs. Tanvi Trading and Credits P.Ltd. and others. Rangnath Misra CII and M.H. KANIA and Kuldip Singh JJ April 23, 1991.
Acquisition of immovable property – Proposed transfer of immovable property – statement  filed – Appropriate Authority – Scope of Powers – Only to decide whether Government should purchase properly or if no decision to purchase is ordered to issue no objection certificate Income Tax Act 1961 Ss 269 UC (3), 269 UL (3).

5. Acquisition of property {187 ITR (St) 66}
Two different report by Valuation Officer : No basis for either report : Effect.
3.12.1990 : Their Lordship N.D. Ojha and S.C. Agrawal against the judgement dated 14.3.1985 of Delhi High Court in ITSA No.1 of 1984 reported in 157 ITR 308, whereby the High Court dismissed the 2nd Appeal of the Department against the order of the Tribunal and held that the true meaning of Section 269 C, of the Income Tax Act 1961 was that there must be material before the Competent Authority to show that the fair market value exceeded the apparent consideration by more than 15% and that neither under section 269 L of the Income Tax Act was there power given to the Valuation Officer to submit a Second Report and that as there was no basis for either of the report submitted by the valuation officer in this case, the acquisition of the property was not valid : Commissioner of Income Tax Vs. Arun Mehta SLP (Civil) Nos. 12452 – 12455 of 1984.

6. Acquisition of property {188 ITR (ST) 86}.
Tenant of property : Whether can request for acquisition 19.2.1991 : Their Lordship K.N. Singh, Kuldip Singh and P.B. Sawant J.J. dismissed a Special Leave Petition by a tenant of a building against the judgement dated 23.11.19890 of the Delhi High Court in C.W.P. No. 3483 of 1990 whereby the High Court dismissed the tenant’s writ  petition on the ground that he had no locus standi to file the petition. In this case the building in question had been agreed to be sold to a third party for a certain sum, permission of the Income Tax authorities obtained, and the tenant had been survey notice to vacate the premises. The tenants claimed that the agreed consideration was low and that the Department should acquired the property : S.R. Minocha Vs. Appropriate Authority SLP (Civil) No. 16703 of 1990.

7. (In the Orissa High Court)  (188- ITR  306
Madan Mohan Samantray
Vs.
Union of India and others
G.B. Patnaik and J. B. Mahapatra JJJ
April 17 1990.
Acquisition of immovable property – Jurisdiction of Civil court – suits in Civil Court impliedly barred in proceedings under Chapter XXA – income Tax Act 1961 Chapter XXA S. 293.

8. (in the Madras High Court).  188 ITR – 306
Naresh M. Mehta Vs. Appropriate Authority.
Kanakraj J. January 19, 1991.
Acquisition of immovable property – Agreement for sale of property – Application for certificate of  No Objection- Property sub-divided and sol without sanction from Appropriate Authority – No prohibition against sale of such property privately subdivided -  rejection of application  not valid – Income Tax Act 1961, S 269 UC, constitution of India Act 226.

9. (In the Delhi High Court) 188 ITR  623
Tanvi Trading & Credits Pvt. Ltd. and others
V/s.
Appropriate Authority and others
B.N. Kirpal and Mrs. Santosh Duggal JJ.
November 28, 1990.

Acquisition of immovable property – proposed transfer of immovable property – statement filed – appropriate Authority scope of powers – only to decide whether Government should purchase property – No power to decide whether proposed transferred is illegal – If no decision to purchase ordered,  Appropriate Authority should issue No Objection Certificate. No jurisdiction to order statement to be filed  - Income Tax Act 1961 SS 269 UC (3) 269 UD 269 UL.

10. (In the Delhi High Court)
Mrs. Satwant Narang (188 ITR 656)
V/s.
Appropriate authority IT Department, New Delhi.
M. K. Chawla and Arunkkumar JJ December 14 1990 Acquisition of immovable property – proposed transfer of immovable property for more than RS. 10 Lacs – Prescribed statement filed – Appropriate Authority – Scope of powers – To order purchase of property b Central Government on issue No Objection Certificate – No jurisdiction to go into object or purpose of transaction – No jurisdiction to club one property with another find fault in validity of proposed transaction – Property cleared by competent authority under land ceiling  Act – Municipal Corporation not disputing ownership – Appropriate Authority can got go into legality of proposed transaction on the basis of defects in adjacent plot subject – Matter of separate statement – Income Tax 1961 SS 269 UC, 269 UD, 269 UH 269 UL.

NON – Taxability of surrender of tenancy rights prior to 1-4-94
By Vimal Punmiya, Chartered Accountant

The issue regarding taxability/non-taxability of surrender of Tenancy rights is giving sleepless nights to millions of Tenants, especially in city like Mumbai where Pugree system is in great vogue.
The decision of the Special Bench constituted by the Bombay Tribunal in the case of Cadell Wvg. Mill Co. (P) Ltd. V/s. ACIT reported in (1995) 55 ITD 137 (Bom.) sent shocking waves to millions where in the Tribunal had taken stand that the amount received on surrender of tenancy right was casual income and taxable and that only where permission was granted to the tenant at any time by the Landlord under the terms of the contractual tenancy or where any permission to sub-lease was obtained by the tenant from the Landlord, the surrender of tenancy rights even by the statutory tenant is a valid transfer of capital asset.

Recently on similar facts and issues the Special Bench constituted under the Delhi Tribunal in the case.
The amount received on surrender of Tenancy rights is a Capital Receipt.
It can be charged to tax only under Capital Gains.
But chargeability failed because of the decision of the Apex Court in the case of BC Srinivas Shetty reported in 128 ITR 294/5 Taxman 1(c) provisions cannot be applied was regarded as never intended by section 45 to be subject of charge.
That the amendment made in section 55(2) by the Finance Act 1994 taxing the receipts as Capital Gains was only prospective in operation.
For arriving at the aforesaid decision the Delhi Court decision and distinguished the issues with the High Court which have taken a contrary view.
In order to treat the receipts as Capital receipts reliance was placed in the case of BAWA SHIV Charan Singh V/s. CIT (1984) 149 ITR 29 (Delhi) where it was held Property is a term of widest import and it signifies every possible interest which a person can acquire, hold and enjoy. Tenancy right is a Capital Asset. When the interest of the Lessor is a parted with, the price paid would be premium or salami, but the periodical payments by the lessee for continous enjoyment of the benefits under the lease are in the nature of rent, the former is a capital receipt the letter a revenue receipt.
The apex court in Universal Radiators V/s. CIT (1993) 201 ITR 800 /68 Taxmann 45 (SC) has held that the eligibility to tax is different from liability to pay tax. Since the amount falls within the ambit of eligibility to tax the same is outside the purview of exempt income. The Allahabad Court in Smt. Anand Bala Bhusan V/s. Cit (1995) 83 Taxmann 548 (all.) has stated that Section 10(3) applies to casual and non-recurring income which are not chargeable U/s. 45 of the Act. The term All receipts in Section 10(3) cannot enlarge the scope of Section 10(3). Similarly the Delhi High Court has distinguished the decision of the Bombay Tribunal is Cadell wvg. Case stating that the said case was rendered with reference to the provision of the Bombay Rents, Hotels, Lodging House Rates Control Act, 1947. Section 12 thereof only entitled the statutory tenant to continue to be in possession till standard rent or permitted increase are paid. Therefore, the statutory tenant did not have an estate or interest capable of being transferred placing reliance in the case of Anan Niwas P.Ltd. V/s. Anandji Kalyanji pedhi AIR 1979 SC 144. The said Section of the Bombay Act entitlked statutory tenant to continue to be in possession till standard rent or permitted increases are paid, nothing further whereas under DRC Act, rights of a statutory tenant were held to be heritable.
The Delhi Tribunal has also held that the decision of the Allahabad High Court in CULABCHANDS case reported in 192 ITR 495 wherein it was held the receipts were of casual and non-recurring nature and provisions of section 10(3) are applicable is not correct because the said decision is revered by the Calcutta High Court in B.K. Roy (P) Ltd. V/s. CIT (1997) 211 ITR 500, Karnataka High Court in Joy ICW Creams (Bang.)  P.Ltd and Cadell Wvg, Mills Coo. Pvt. Ltd. (Bom. Tribunal) also the same Allahabad High Court on similar facts in the case of Smt. Anand Bala Bhushan V/s. CIT (1995) 83 Taxmann 548 (all.) head held that the receipts of compensation was nto of the nature of ordinary income and, therefore, the question of treating the same as a casual receipt for the purposes of income tax did not arise.
The Delhi Tribunal has stated that under the Delhi Rent Control Act a tenant even after the determination of the tenantncy continues to have an interest in the tenanted premises as held in SMT. Gian Devi Anand V/s. Jeevan Kumar AIR 1985 SC 796.
Further under the following cases :
Surrender of tenancy rights in a premises for ownership rights in another premises does not constitute a transfer :
(1991) 192 ITR 382 (S.C.) A. Basper
(1984) 148 ITR  99 (Bom) Nila Products
(1981) 129 ITR 448 (Bom.) Mrs. Shirinbai P.Pundole
(1979) 117 ITR 581 (Cal.) A. Gasper
In view of the decision of the Delhi Tribunal I am of the view that on representations made the Bombay Tribunal may reconsider or review its decision because if section 5(3) of DRC Act prohibits the tenant from claiming or receiving payment in consideration of relinquishment transfer or assignment of his tenancy, and section 48(1)(b) of DRC Act prescribes penalty for contravention of the provisions of Section 5 of DRC Act the similar provisions are also available in the Bombay Rent Act and even under the Bombay Rent Act a tenant continues to have an interest in the tenanted premises.

Gist of recent judgements – 9th March 2000 Compulsory acquisition of immovable properties by Government of India under Chapter XXC of Income Tax Act

The Government believed that the parties were under-selling immovable properties in order to save more stamp duty registration charges and tax under the Income Tax Act, hence the Govt. of India introduced Chapter XXC of Income Tax Act. Initially the limit of transaction was Rs. 10 lakhs or more so far as Greater Mumbai is concerned. This limit has now been enhanced to Rs. 75 lakhs. The constitutional validity of this provision was challenged in the Supreme Court of India which held that Chapter XXC of the Income Tax Act was valid. (See S.C. Judgement in the case of Keshav Ram & Co. vs. Union of India, reported in (1989) 3 S.C.C. Page 151).
Supreme Court has also held that if the Government of India takes a decision to compulsorily acquire the immovable property, due notice should be given to the parties concerned and proper hearing should be given to them before taking any decision for compulsory acquisition of immovable property.

Acquisition of Immovable property for Public purposes under the Land Acquisition Act, 1984
The Land Acquisition Act authorizes State Government inter alia, to acquire immovable property for public purposes or for benefit of a Limited Company having certain objects. Sometimes persons whose properties are notified to be acquired submit their opposition when Enquirer is held by the Special 5A of the said Act. If any of the parties affected by the proposed acquisition initiates proceedings for quashing of the acquisition proceedings, the Court may on finding that the acquisition proceedings  were not valid, quash the Notification u.s. 6 of the said Act. But that party which approaches the Court for the relief alone is entitled to the benefit of the decision. Other parties whose property is notified for acquisition are not entitled to take any advantage of the decision so given in favour of only one party who approached the Court.
(See S.C. Judgement reported in 1994 (4) ALL MR in the case of Delhi Administration v.s. Gurdip Singh Urban & Ors. Page 678).

Government dues such as Sales Tax, Income Tax, Land Revenue etc. have priority over other creditors
Borrowers when they approach financial institutions for financial facilities, financial institutions require borrowers to furnish adequate security. Generally, whenever borrower owns any immovable property, he creates an equitable mortgages in favour of the financial institutions as security for repayment of the proposed loan financial facilities. In proceedings initiated by financial institutions for recovery of its claim, it moves the Court for appointment of Receiver of the mortgages property and Court generally appoints a Receiver of the mortgages property. The Government can file a claim before the Court Receiver claiming priority over the financial institutions. The Court has held that claim of the Government for recovery of tax, etc has a priority over all other creditors whether secured of unsecured. (See the Judgement of Bombay High Court reported in 1994(4) ALL MR 679 Bank of Maharashtra vs. Konkan Companies Pvt.Ltd. & Ors.

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X. Rent Control Acts in India

The law in a changing society


 By M.D. Rijhwani


Posted on 15th May 2002

Genesis of lease:

After the industrial revolution in Europe in the nineteenth century, emerged a middle class between two well etched classes namely feudal lords and their subjects. The middle class became the vehicle for the commerce of the manufactured goods. They soon became rich in the incarnation of industrialists and businessmen, scientists, professors, bankers and their aides, the directors of joint stock companies and still lower the vast number of professionals as managers in industry and commerce. In fact they formed the backbone of new civilization thrown up by the new conditions.

All the groups forming higher and lower middle class aspired to live with the grace and comforts of feudal lords. They started living in luxurious houses either built by them or acquired on lease. The building activity in urban areas grew up by leaps and bounds with the insatiable demand of the expanding middle class. One way of investing money then was to build houses and give them on to business houses for commercial purposes or for housing the ambitious middle class. The investment therein was branded as gilt-edged security as the advantage in building houses and letting them on rent was that the investment in immoveable property was more safe compared to the investment in commerce and other fluctuating securities and earned a definite income continuously according to the rules of demand and supply and also had the easy liquidity in the sale of the property on expiry of the lease or subject to the lease already granted which would expire sooner or later and then the property liquefied. The tenants who stayed on in spite of the expiry of lease could either be evicted by self help or by the decree of a court which could be obtained easily according to the general law of the land. The scene of liquidity froze in the frame of time till the outbreak of the First World War in 1914.


 

Rent Restriction Acts: Their features

In the war, rows of houses were destroyed by bombing and those lying vacant in tenantable condition were requisitioned. Most of the buildings had deteriorated for want of repairs. The prices of all commodities went up including those of building material. The demand for housing became acute. The lessors (landlords) who normally renewed leases resorted to action for eviction and started charging heavy rents for fresh leases. In England, the government stepped in and passed laws called rent restrictions acts (1) to prevent landlords increasing rents above the maximum rents permitted by the new laws (2) to give tenants security of tenure by preventing landlords from evicting them without an order of the court which could not be given except on certain specified grounds like default in the payment of rent, sub-letting, making structural alterations, and the landlord’s genuine need to occupy the premises and some more. The acts were a piece of social legislation protecting lessees in occupation as it would have been hard for them to find out another suitable premises which had become scarce and exhorbitant in rent. The protection was specifically given to the persons in occupation of a tenement and on their death to the members of their family living with them. In respect of the tenancy of commercial premises, it went to the next of kin. (The terms lease and tenancy have the same meaning, the difference being only historical).

As against these rights namely the security of tenure coupled with the right to pay only the standard rent, which were meant for personal protection of tenants, the acts took away the historical right of a tenant to assign the lease to an other person or sublet the premises. The tenant, therefore, was not allowed to profiteer by assigning the tenancy or subletting it which he could do as per the law before the passing of the acts.

In England the first rent control act was passed in 1915, the Increase of Rent and Mortgage Interest (War Restrictions) Act, 1915. Thereafter many rent acts were passed like Increase of Rent and Mortgage Interest (Restriction) Act, 1920 (Act of 1920) and later in the years 1923, 1933, 1938, 1939, 1957 and 1965.

In India, the first law was passed in Bombay Presidency in 1915 on the model of English law and thereafter in 1939 which was repealed and replaced by a comprehensive law called the Bombay Rents, Hotel, and Lodging House Rates Control Act, 1947 which has now been repealed and replaced by the Maharashtra Rent Control Act, 1999. The Maharashtra Rent Control Act, 1999 also repeals two Rent Control Acts in force in the Marathwada and Vidarbha region of Maharashtra and presents a unified law on the subject of rent control.

Similar laws were passed in other provinces in India as a first step in the enthused social awakening.

In England, landlords and tenants by and large respected the law, but, in India, they stultified the whole objective of the social legislation. The tenants started subletting parts of the premises on labels called paying guests or the whole of the premises on fabulous payments on the so called care taker arrangement. The cautious among them paid a share to the landlords from the money obtained for transfer of tenancy i.e. one surrendered the tenancy and the other took a fresh one in his favour. Again the Bombay Land Requisition Act was passed in 1948 to requisition the lands and houses which had fallen vacant for public purposes and forced the landlords to notify the vacancy of tenancy to the government and on the government refusing to occupy the vacant houses the landlords could create a fresh tenancy. The Land Requisition Act was largely misused.

The tenants who obtained the unique protection were required to be strictly regular in payment of rent and if they defaulted, were penalized severely in forfeiture of tenancy and finally ejectment by decree of the Court of law. Later on some states like Maharashtra became rational by removing the sting from the law of forfeiture of tenancy by providing for payment of interest at the rate of 9 per cent per annum on the amount of the arrears of rent a defaulted payment.

After the passing of the acts in the last fifty years, virtually all commercial premises have changed hands at least ten times and the landlords given a fair share each time. In residential premises also, the landlords got a good slice each time the tenancy changed hands.

New commercial premises came to be built after Second World War on a grand scale around the already existing old business centres. They were either leased on a premium or on high rents which now appear to be lowly. In such class of premises again, the tenancy has been transferred a number of times. Those who prospered went away for bigger places and those who did not were brought out. The landlord had a finger in every pie. In metropolitan cities like Bombay and Delhi the present tenant is not the original tenant of war days but is the man who well knows the history of the seven generations of his forefathers but not that of the tenants before him who have far outnumbered his grand fathers, each one of them having paid a share of premium to the landlord and gone away happily. It is the landlord who can tell the tale. The present tenant who came in five or ten years ago may be paying a seemingly paltry amount as rent but who can deny that he and the tenants before him had successively paid a share of premium which will sustain the landlord and his family for generations to come. The landlord has collected, during the last fifty years, the value of his property five fold and still retaining the invaluable right of reversion; reversing the fate of tenant rather than reverting to the land.

Rents Acts in operation:

The Bombay Rent Act, 1947 was amended in 1959 introducing an exception to the prohibition of assignment of tenancy of commercial premises. That was that a tenant of commercial premises, while disposing of the whole of his stock in trade, his assets and liabilities, along with the goodwill of the business (name and style), could assign the tenancy to a purchaser of his business. This was a welcome provision which gave mobility to the business.

The housing shortage continued to worsen. Needy persons took premises on leave and licence paying large deposits and heavy licence fees. At times the courts tore off the label of licence and declared the transaction to be a lease which brings in protection of the rents acts, security of tenure and the right to get the rent standardised.

Normally the arrangement of leave and licence was literally honoured and on expiry of the term of licence, the possession was quietly handed over. In spite of the two judgements of the Bombay High Court following a judgement of the Supreme Court dispelling the clouds hovering over the genuine transaction of lease, very few people went to the courts. And whenever they went there they were looked down upon by the stern eye of the courts for retracting from the gentleman’s agreement. In preface to my book “Lease and Licence Distinguished” (N.M.Tripathi, 1968) I had said, “Rent Control legislation is one of the forms of social legislation. Any attempt to evade the operational effects of the legislation is viewed by the courts as a dishonest act and to claim its protection is equally considered ungentlemanly unless an additional case for survival is made out. Surely, this changing face of the courts keeps the balance between the freedom of contract and the struggle for survival.”

The happy balance existing in the society and largely managed by the courts was tilted by the amendment to the Bombay Rent Act commencing from the 1st February 1973 transforming all licensees with subsisting agreements into deemed tenants and making it an offence for a tenant thereafter to give a premises on leave and licence. The legislation put a fear in the mind of the people dispensing accommodation, creating scarcity all around.

One unsavoury consequence of the Amendment Act of 1973 was that even pure licences given out of good will for a short period and for a reasonable licence fee without taking any deposit were also protected even though they were created just a few days prior to the 1st February, 1973. This ruined many an honest licensor and many upright licensees were tempted to take immoral, though legal stand and claim tenancy. What is worse, rich companies, banks, governments and governmental bodies which need no protection as an individual licensee does, have claimed advantage of the amendment.

Similarly the sub-tenancies created before the 1st February 1973 was legalized by amendment to the Bombay Rent Act in the year 1987.

After a long period of fourteen years came the respite from another piece of legislation in 1987 amending the Bombay Rent Act, pinning down the arrangement of leave and licence to its literal sense allowing no scope for interpretation by the courts. An agreement of leave and licence could not be constructed as camouflage of the lease but to be governed strictly by the terms of the agreement. It gave a fillip to the dispensation of the vast volume of accommodation lying idle since then.

Soon thereafter the Central Government announced the national housing policy which recommended the rationalization and far as possible to achieve the uniformity of the rent laws in all the states in India. Not being satisfied with the formulation of a general broad policy it also drafted a terse and no nonsense model rent law which among other things recommended 1) exempting the application of rent law for a period of fifteen years from the houses newly constructed or substantially renovated 2) exempting the application of the law from residential as well as non residential premises charging more than a prescribed rent 3) making a provision of creating tenancies for a limited period 4) fixation of standard rent on the market value of the land and the cost of construction. 5) revision of rent of existing tenancies on a graduated scale and again the periodic revision of rent on the prevailing consumer index and 6) setting up two tier system of adjudication with rent controllers and tribunals ousting the jurisdiction of courts and establishing speedy and simplified procedures for settling disputes within a year.

Then finally came the Maharashtra Rent Control Act, 1999 consolidating the three acts in the state of Maharashtra. A draft bill vouching adherence to model rent law with a great fanfare in early nineties was circulated in public inviting suggestions from them. After lying in limbo for nearly eight years the act was passed commencing from 31st March 2000. It has failed to swim with the essential thrust of the model rent law as well as the aspirations of the people. Since it has not affected in any manner the status or tenure of tenancies acquired under the said earlier three acts which otherwise would have belied the logic of present economic conditions the standard rent which has been made revisable at five per cent could have been made revisable at a uniform licence fee charged in cases of premises given on leave and licence and can be said to be reasonable in the current inflationary trends.


 

Maharashtra Rent Control Act, 1999: Salient Features:

The new act that is the Maharashtra Rent Control Act, 1999 has in the preamble said what changes it is going to make. It says, “the act is to unify, consolidate and amend the law relating to the control of rent and repairs of certain premises and of eviction and for encouraging the construction of new houses by assuring a fair return on the investment by landlords and to provide for the matters connected with the purposes aforesaid”.

The salient features of the new act of 1999 are :-

1) Consolidation of the three acts as mentioned above but omitting the application of the act relating to the control of rates of hotels and lodging houses.

2) Withdrawing the application of the act from the companies (S.3. (1) (b)).

The new rent control act of 1999 has withdrawn the application of the act from the banks, public sector undertakings, or any corporation established by or under any central or state act, or foreign missions, or international agencies, multinational companies and limited companies having a paid up share capital of more than rupees one crore. This suggestion was given by me in my article in a daily in 1978 and repeated by me in the second edition of my book “Lease and Licence Distinguished” thus: “What a fall! . … … … The amendment of 1973 converted certain licenses into leases into leases and offered a morsel to the needy and struggling persons. The companies and other like groups snatched it away and gulped it. … … … It is really sad to see a company paying high salaries to its directors and officers along with all the conceivable perquisites, rich dividend to its share holders and with its capability to spend away the funds on any obscure heads while at the same time claiming the protection of the rent acts. ………. Now what is the way out? A company takes premises on lease for a fixed period and then refuses to vacate it on expiry of the stipulated period taking a stand that the lease is protected under the rent act or that the premises given on leave and licence comes within the protection of the amendment of 1973. How is the company to be compelled to restore the socio-economic balance achieved by the tradition of “company lease?” … … … An ideal solution is a suitable legislation to specifically exclude the companies incorporated under the companies act, foreigners, foreign governments, their consulates and trade representations, the central and state governments in India and such like from the protection of the rent acts.”

However the new act while withdrawing protection from the companies has not withdrawn the protection from the premises let to the government or to local authority or taken on behalf of the government who have enjoyed the protection of the rent acts from the very beginning and continue to enjoy the said privilege. The picture has changed now. The government is no more a government with only policing duties. It has taken to wings to fly into the far away skies of economic adventurism with the avowed adoption of socialistic pattern of society as a form of governance. It has lot of money to squander away. Then why should they not pay the rent according to market forces or acquire new premises on prevailing market rate? The new act ought to have withdrawn the protection from the government also.

The discrimination against the companies is unconstitutional in so far as the government falls in the same class as the companies and there are no intelligible differentia that can separate the companies from the government in regard to the objective to be achieved by the enactment withdrawing the protection of the rent act from the companies and not from the government.

3) Withdrawing the application of provisions of standardization of rent from the premises, whether old or newly constructed, which have not been let or given on licence for a continuous period of one year (S.6)

By amendment to section 4 of the Bombay Rent Act (inserting sub-section 1A after Section 4) in 1987 the provisions relating to standardization of rent were withdrawn for a period of five years to buildings constructed after the 1st October 1987 so that the landlord could recover a larger part of his investment in that period according to the rules of demand and supply. Similar provisions had been enacted in other states long ago.

The new act of 1999 carried the concept further. The provisions relating to standard rent have been withdrawn from the premises given on tenancy or license in buildings whether old or newly constructed where they have not been let or given on licence for a continuous period of one year. It would have been abreast of the times if the tenancies created after the commandment of the act had been exempted altogether from the operation of the act that is not only from the provisions of the standardization of rent but also from the protection of tenure under the Act.

4) After having given maximum rights to tenants the legislature began to zealously secure to landlords payment of rent under the English acts as well as under the earlier acts in India. It scripted a draconian provision that if a tenant remained in arrears of rent for more than six months and if he failed to pay them within one month next after the month in which he received the notice, the tenancy stood forfeited and on suit being filed the court had no choice but to pass the decree of eviction. The maxim ‘ignorance of law is no excuse’ which was treated by law books as archaic and quoted by judges with a wink to confuse junior lawyers was applied here without showing remorse. The hapless tenants came to be evicted in droves. Even the Supreme Court raised its hands in reading discretion to have been invested in judges to avert the consequence of forfeiture. Finally in 1987 the legislature woke up in the cries of tenants and watered down the stringent law. The forfeiture was not to take effect if the defaulter deposited in court the arrears of rent with simple interest at the rate of nine per cent per annum on the first day of the hearing of the suit and complied with other conditions including the payment of the cost of suit. Such relief was not made available after availing of two such chances.

However under the new act of 1999 the relief against forfeiture can be availed of every time the defaulter complies with the simple requirements laid down in section 15(3), which are more or less similar that is if, within a period of ninety days form the date of the service of the summons of the suit, the tenant pays the standard rent and permitted increases then due together with simple interest on the amount of arrears of rent at fifteen per cent per annum and thereafter continues to pay regularly such standard rent and permitted increases till the suit is finally decided and also pays the cost of the suit as directed by the court. The proviso limiting the chances of relief against forfeiture only for two such defaults in the provisions of the old act has been conspicuously omitted here. Thus the payment for the arrears of rent are equated, as it were, with the collection of bill each time for payment of services rendered or goods sold with the compound interest customarily charged on delayed payments, the compound interest here being the cost of the suit. The penalty of simple interest at the rate of fifteen per cent per annum and the cost of the suit which in these days is back breaking is a sufficient deterrence to making default in payment of rent.

5) Under the Act of 1947 the standard rent once fixed could not be increased or decreased. Only the permitted increases could be increased if new areas of collecting social charges were to be traversed. Now under the new act increase in standard rent is permitted annually at the rate of four per cent (s.6). As the security of tenure, one of the two basic tenets on which all rent control acts were founded, has not been touched, it would have been keeping with the times if the standard rent, which has justifiably not been allowed to be revised retrospectively and which in any case was always a lesser principle and now evaporating in inflationary heat, had been allowed to be increased at the rate of at least ten per cent annually which is the norm in the transactions of letting premises on leave and licence for more than a year and yet considered a pittance by economics of the present day.

6) Registration of the agreement of tenancy as well as leave and licence has to be compulsorily made by landlord or licensor on pain of imprisonment and fine. Tenant or licensee has been allowed in absence of registration of agreement to prove the terms orally (s.55).

7) Payment of premium as consideration for the grant or relinquishment of tenancy which was made illegal in England and India with civil and criminal consequence has been explicitly permitted to encourage dealings in black and white which were hitherto in black only, to generate money for circulation in the market as well as tax for the exchequer.

8) If you call it leave and licence, it is leave and licence: In Delhi and New Delhi the concept of the grant of tenancy for a limited period or the rent act not applying to a tenancy when the rent charged exceeds a certain amount was introduced long ago as a precursor to the laws rationalizing the rent acts. But the amendment of 1987 to the Bombay Rent Act, 1947 inserting section 13A2 was a consummate step in that direction. The classic distinction between the concept of lease which has well-defined ingredients giving a right in immovable property and that of licence which only makes the user lawful without creating a right in immovable property, kept alive by subtle reasoning, called quibbling by judges in private conversation, has been changed by the legislature to sub-serve the interests of the fast changing society. The clear-out lease by mutual agreement can be so arranged as to give it a character of ephemeral licence to occupy an immovable property for a short period of time; only the business premises have been left untouched for the reasons of their easy availability for an asking price and the stakes in the business being so high and engaging that fighting for the gains of lease, which are being diluted from time to time, look chicken-feed. The new act of 1999 has planted the said amendment whole sale in section 24 thereof.

9) Government allottees under the Bombay Land Requisition Act, 1948: The Supreme Court in the case of H.D. Vora (1984) 2 SCC 337, gave an innovative judgement that the continuance of the requisition of premises for more than thirty years which was conceptually temporary in character was a fraud on the power of the government which in effect did the acquisition of the property without paying the market value of the property in the guise of requisition and ordered the government to release the landlord’s premises from requisition The landlords whose premises remained under requisition for more than thirty years got a manna from heaven and quickly filed the writ petitions in the Bombay High Court for an order directing the government to derequisition their premises. As the Government Pleader on the original side of High Court, Bombay in the mid-eighties I stood defenceless and alone facing the juggernaut unleashed by the Supreme Court. The High Court allowed the petitions and passed the orders of eviction. The allottees went to the Supreme Court.

The cases were referred to the constitutional bench of five judges. The majority by four to one (AIR 1994 SC 2319) by yet another subtle interpretation of law confirmed the judgment given earlier in H.D. Vora’s case. Justice P.B. Sawant in his minority judgment agreeing with the reasoning of the majority on questions of law however ruled differently on when the allottees should vacate the premises and said that since the landlords with the tenements freed from requisition would get the same standard rent they would not be prejudiced if some more time was given to the allottees to find out suitable place for them. The government by amendment to the Bombay Rent Act, 1947 trying to rescue the allottees redefined their status as deemed tenants. The provision was challenged in Bombay High Court in the case of Ramji Premjibhai Gohil, 1998 (4) MLJ 523 and finally struck down as ultra vires the constitution as beyond the legislative competence. The said provision has been transplanted as section 27 of the new act of 1999 which on fresh challenge is declared unconstitutional in Subhash Laxmidas Majithia, W.P. No. 1595 decided on 30.4.2001 by Bombay High Court following its earlier decision in Ramji’s case. The allottees are now waiting for the verdict of the Supreme Court with their hands raised in prayer.

____________________________________________________________________

XI. Stamp & Registration

BEWARE! BEFORE YOU PAY STAMP DUTY AS PER READY RECKONER IF IT IS MORE THAN THE ACTUAL CONSIDERATION SHOWN IN THE AGREEMENT OR CONVEYANCE:

By Bankimchandra P. Khona


 

  1. It is common knowledge that the market value mentioned in ready reckoner in most of the cases is much more higher than the actual market value of the properties. As Registration Authorities refuse to accept the conveyance or Agreement to Purchase land or property or flat parties are forced to pay higher stamp duty as the market value as per the ready reckoner which is much higher than the actual consideration paid by the Purchaser to the Vendor.


 

  1. Practically in all cases and specially in purchase of flat parties cannot afford financially and time wise to contest the claim of stamp authorities and registration authority as to the market value of the property. People have no such time to take legal proceedings to challenge the valuation. People financially do not find it appropriate to contest market value because unless and until their document is registered they do not get any title. Therefore, in most of the cases and specially in Mumbai people pay stamp duty at higher market value than actual consideration under the document, they do so with a view to buy a peace. The question arises do they really buying peace?


 

  1. Very interesting incident arose in one case before the Punjab & Haryana High Court. It was the case where price shown in Regd. Deed and the price shown for the purpose of stamp duty were different. Price shown in the Registration deed was lower than the price calculated for the purpose of stamp duty. Question arose was is it not a case that the Income Tax Officer has reason to believe that there is omission or failure on the part of the assesses to make true and full disclosure of all material facts necessary for assessment with regard to the said transaction ? Is it not a case whenever a part of its income, profits or gains chargeable to income tax has escaped assessment ? In the said case Assessing Officer had initiated action under Section 148 of the Income Tax Act for the earlier assessment because though the price of the property shown in the Registered Deed was Rs.3.00 lakhs but for purpose of stamp duty, the said premises was valued at Rs.4.60 Lakhs. This was an incident of an offence to suppress correct information about its income. The Hon'ble High Court of Punjab & Haryana held that this alone could be constituted a valid ground for forming a prima facie information that the assessee's income has escaped assessment warranting initiation of proceedings under Section 148 of the Income Tax Act.


 

( VED PRAKASH NAGORI Vs. INCOME TAX. )


 

  1. Considering the said Judgment now it may be open for Income Tax Officers to issue Notice or content in a case of assessee that even though he has shown consideration received as `X' but he has valued the property for the purpose of stamp duty X + Y then the `Y' is Conceal Income. He has not fully disclosed all material facts necessary for his assessment. Therefore, all the citizens who for the purpose of stamp duty in view of the ready reckoner, value the property for more than the actual consideration than for a difference it will be open for Income Tax Officer to content that there is a concealment of income being the difference between market value calculated for the purpose of stamp duty ( which is the valued according to the ready reckoner) and the actual consideration received or shown in the document. Same will apply in the case of the Purchaser that he has paid difference between the market value as per ready reckoner according to which he has paid stamp duty and the payment shown in the document, by what we popularly call “On Money” or unaccounted funds 'and that he has concealed the said difference from Income Tax Authority as his income in same or earlier years. Therefore, every time when a citizen buys property and mentions price but to get his document registered shows more valuation for the purpose of stamp duty and gets the document registered is running a risk to face the inquiry from his or her ITO and also facing risk of paying Income Tax and penalty for the said difference between value as per the ready reckoner and the actual amount shown in the document.


 

  1. For an illustration we can take an example. If a Purchaser purchases a flat for Rs.10 lakhs and shows Rs.10 lakhs as amount as consideration in his document, but because the market value as per ready reckoner is Rs.12 lakhs, then to get his document registered he, for the purpose of stamp duty values property at Rs.12 lakhs and not Rs.10 lakhs and pays the stamp duty accordingly. In a such a case it will be open for ITO to content that the difference between two namely Rs.2 lakhs is concealing income in the case of both i.e. the Purchaser as well as the Vendor and may ultimately assess both of them accordingly and one will become liable to pay income tax and penalty on said sum of Rs.2 lakhs. Each one of them, the Vendor and the Purchaser will be liable to pay Income Tax and penalty for the said sum of Rs.2 lakhs. This can affect practically majority of the Vendors and Purchasers as the market value as per the ready reckoner seems to be much more higher in majority of the cases than actual price or consideration for buying or selling property, flats, shops and offices in Mumbai.

How to Register your documents?

Vinod C. Sampat

Advocate-High Court

The process of registration mainly involves the following steps and submissions of required documents/papers to the registrar office :-

  1. The party has to first pay the proper stamp duty as per the stamp duty reckoner on blank agreement. The agreement should be typed/printed on one side in blank ink.

  2. Execute the agreement.

  3. Visit the sub-registrar office, who will determine registration fees payable and issue the challan/confirms to accept the pay slip.

  4. Pay the registration fees by challan/pay slip from nationalise bank as per procedure laid down by respective sub-registrar.

  5. On a given telephone number of Registrar's Office prior to one working day of intended Registration, Party has to obtain the appointment date, time and token number. On such appointed time and day the parties to the documents have to remain present at Registrar Officer to comply with Registration formalities. On the day of registration the token number is announced calling the party for registration.

  6. In case of document of property having value above Rs. 5,00,000/- Proof of permanent Account No. (PAN) of all the parties to the documents is mandatory. If the party do not have PAN, then to file Form No. 60 alongwith documents to the sub-registrar.

  7. Two witnesses should remain present for identification of parties to the agreement for which witnesses have to put their signatures before registering authority. Such witnesses should not be necessarily same who has signed as witnesses in the agreement. These witnesses should sign before registrar as token of identification of the parties to the document.

  8. Sometimes, if the parties, produced their passport as token of identification, the subregistrar can register such document even without witness/witnesses for which one has to pre-check the matter and procedure with respective sub-registrar's office.

  9. The property card of land/plot on which the property being registered is situated is required to be produced. Property card is required at the time of registration, even by property/flat property is situated.

  10. Payment of registration fees by government challan or by pay-order or bank draft of nationalized bank and computer charges/scanning charges etc. based on number of pages in documents are to be paid in cash at the time of registration of documents. The copy of such pay order/demand draft of bank for registration is to be submitted on the day of taking token no. on telephone.

  11. Complete filling up of input Registration form as prescribed by the stamp duty department or Registrar or sub-registrar. The input registration form and document are required to be submitted at token window in advance i.e. At least before half an hour before registration.

  12. Pre-adjudicated document will aid in faster registration. In such adjudicated document, the registrar need not ascertain the discrepancies/deficiencies for stamp duty payment. In other words, Registrar presumes that proper stamp duty on such adjudicated document is determined and paid by the party.

  13. In respect of old building to avail the benefit of depreciation on market value then the attachment of following proof will help to avail depreciation on age of building.

  14. (1) Municipal assessment bill or (2) Completion Certificate or (3) Occupation Certificate or (4) Telephone bill or (5) Electricity Bill

  15. For proof for authorise structures the following documents are required :

  16. (1) If the building is completed before March 25, 1991 the property assessment municipality bill is required to be attached.

  17. (2) If the building is constructed/completed on or after March 25, 1991 one proof out of following is to be attached.

  18. i) Commencement Certificate of building OR

  19. ii) Building Completion certificate OR

  20. iii) Building Occupation certificate

  21. Further the IOD issued by the municipal corporation in view of proving the legal and authorized structure etc of the premises is also sometime considered.

  22. Practically, the sub-registrar insist for OC or CC and / or Municipality Bill of society showing the year of construction. It is advisable that one has to pre-check such requirement with respective sub-registrar office.

  23. Any proof of determination of market value will help to facilitate the calculation of true market value. The detailed letter from society showing the age of building, built up area of flat, flat no. and floor on which flat is located, details of lift facility available if any, no. of floors of building, types of construction C.T.S. No. & Village/Division etc. may help to justify the calculation of proper market value.

  24. With effect from 01.05.2002, the deficit stamp duty with penalty @ 2% per month or part of the month but not exceeding two times of such deficit amount is required to be paid before registration and proof of such payment of stamp duty and penalty is to be attached at the time of registration of document. Prior of 01.05.2002 such penalty was upto 10 times of deficit stamp duty. Original receipt for stamp duty paid/franking receipt to be produced at the time of registration.

  25. Computerized photographs of parties executing the document are also taken digitally by the Registrar's office. The left thumb impression of all the parties to the document are also taken digitally. Though computer generated programming, the thump impression and photographs ae automatically generated and printed on separate paper which is to be further signed by all the executors before registrar / sub-registrar. From 01.01.2002 affixing photograph and thumb impression are made compulsory for registration of document as regard to property. Registrations of documents are computerized with effect from 01.02.2002.

  26. Sometime, the documents are executed by power of attorney holder for and on behalf of buyer or seller. Generally in case of builders, his power of attorney holder executes the documents and also sign as attorney of such builder. In such case copy of duly executed power of attorney is to be attached with the agreement which is also to be registered. Please ensure that power of attorney should carry the photographs of the executor/executors and of power of attorney holder.

  27. The sub-registrar first obtains signature of parties and witnesses in his presence. Thereafter Registrar puts his official seal and affixes unique numbering block on each page including the additional sheets of the documents and signs on the above mentioned sheets which generally carries photographs, signatures, details of parties and witnesses.

  28. The complete documents alongwith all above details are then scanned by registrar office and preserved as a permanent record at registrar's office.

  29. The party has to submit the copy of pay order/demand draft/R.B.I. Challan for registration fees on the day of taking token no on phone. The Registrar collects registration fees, computer scanning charges, computer and other charges, computer and other charges for which he acknowledges by issuing receipt. This registration fee is to be paid by challan / pay order / demand draft and computer processing expenses are paid by cash at Registrar office before the Registration. Registrar insist for pay order issued by Nationalized bank for payment of registration fees. The pay order should be in the name of respective area's Joint Sub-Registrar or the sub-registrar authorized by the department.

  30. The original agreement after due registration are returned to party against production of the original registration fees receipt. Registration formalities are completed, after which the documents are returned to party within approximately half an hour of completion of registration formalities.

  31. The registrar also insists for production and preservation of following documents copies by the parties to the agreement :-

  32. (1) Original stamp duty paid receipt. (earlier manual receipts were issued)

  33. (2) Franking machine receipts

  34. (3) Copy of challan through which stamp duty and registration charges are paid, if any. OR pay slip/demand draft of required registration charges.

  35. Particularly, for transfer of land, No Objection Certificate (NOC) under Urban Land Ceiling Act, irrespective of its area in Mumbai.

  36. No objection Certificate from Charity Commissioner, Government or Semi-Government body, if such land is held by trust. Now a days registration process is computerized and simplified. Sub-registrar after completing the registration formalities return the original documents back as duly registered within approximately one hour time.

  37. These denotes the process of registration of document.

  38. Now the builder or developer have to put the approved plan in the agreement and also to write the area i.e. measurement of flat/shops etc. in agreement. Further the agreement can not be executed by the builder/developer before approval of plan by competent authority.

BEWARE! BEFORE YOU PAY STAMP DUTY AS PER READY RECKONER

By Bankimchandra P. Khona, Solicitor

 

1)                  It is common knowledge that the market  value mentioned  in ready reckoner in most of the  cases is much more higher than the actual  market value of the properties. As Registration Authorities refuse to accept the  conveyance or Agreement to Purchase land or property or flat  parties are forced to pay higher stamp duty as the market value as per the ready reckoner which  is much higher than the actual consideration paid by the Purchaser  to  the  Vendor. 

 

2)                  Practically  in all  cases  and specially  in  purchase  of  flat  parties  cannot  afford   financially  and  time wise  to contest the claim of stamp authorities  and registration  authority as to the market value  of  the property. People have no such  time to take  legal proceedings  to  challenge the  valuation.  People financially do not find it appropriate to contest market value because unless and until their document is registered they do  not get any title. Therefore, in most  of  the cases  and specially in Mumbai people  pay stamp  duty at higher market value than actual consideration  under  the  document, they do so with a view to buy a peace.  The  question arises do they really buying peace?

 

3)                  Very  interesting incident arose in one  case before the Punjab & Haryana High Court. It was the case where price shown in Regd. Deed and the price shown for the purpose of stamp duty were different.  Price shown in the Registration deed was lower than the price calculated for the purpose of stamp duty. Question  arose was is it not a case that the Income Tax Officer has reason to believe that there is omission or failure on the part of the assesses to make true and full disclosure of all material facts necessary for assessment with regard to the said transaction ? Is it not a case whenever a part of its income, profits or  gains chargeable  to income tax has escaped  assessment ?  In the said case Assessing Officer  had  initiated action   under Section 148 of the Income  Tax  Act for  the  earlier assessment  because  though  the price  of the property shown in the  Registered  Deed  was  Rs.3.00  lakhs  but for purpose of stamp duty, the said premises was valued at Rs.4.60 Lakhs.  This was an incident of an  offence to suppress correct information  about its  income.  The Hon'ble High Court of  Punjab  & Haryana  held that this alone could be constituted  a valid ground for forming a prima facie  information  that the assessee's income has  escaped  assessment   warranting initiation  of   proceedings under Section 148 of the Income Tax Act.

 

( VED PRAKASH NAGORI Vs. INCOME TAX. ) 

 

4)                  Considering   the  said Judgment now it may  be  open  for Income Tax Officers to issue Notice or content  in a case of  assessee that even though he has  shown consideration  received as `X'  but he has  valued the property for  the purpose of stamp duty   X + Y   then  the `Y'   is Conceal Income. He has not fully  disclosed  all material facts necessary for  his  assessment. Therefore, all the  citizens who for the purpose  of stamp duty in view of the ready  reckoner,  value  the property for more than the actual  consideration than for a difference it  will  be open for Income Tax Officer to content that  there is  a concealment of income being  the  difference between market value calculated for the purpose of stamp  duty ( which is the valued according to  the ready  reckoner)  and  the  actual   consideration received  or  shown in the  document.   Same  will apply  in the case of the Purchaser  that he has  paid difference between  the market value as per  ready reckoner according to which he has paid stamp duty  and  the payment shown in the document, by what  we popularly  call  “On Money” or  unaccounted  funds 'and  that he has concealed  the  said  difference from  Income Tax Authority as his income  in  same or  earlier  years. Therefore, every time  when  a citizen  buys property and mentions price  but  to get  his document registered shows more  valuation for  the  purpose of stamp duty  and  gets  the document registered is running a risk to face  the inquiry from his or her ITO and also  facing  risk of  paying  Income Tax and penalty  for  the  said difference   between value as per the ready reckoner  and  the actual amount shown in the document.

 

5)                  For an illustration  we can take an example. If a Purchaser  purchases  a  flat for Rs.10 lakhs  and  shows  Rs.10 lakhs as amount as consideration in his  document, but because the market value as per ready reckoner is Rs.12 lakhs, then  to get his document registered he, for the purpose of stamp duty values property at Rs.12 lakhs and  not Rs.10  lakhs and pays the stamp duty   accordingly.  In a such a case it will be open for ITO to content that  the difference  between  two  namely  Rs.2  lakhs   is concealing  income  in the case of both  i.e.  the Purchaser  as  well as the  Vendor   and  may  ultimately  assess both of them accordingly and one  will  become liable  to pay income tax and penalty on said  sum of  Rs.2  lakhs. Each one of  them, the  Vendor and the Purchaser will be liable to pay Income Tax and penalty for the said sum of Rs.2 lakhs. This can affect practically majority  of  the  Vendors and  Purchasers  as  the market  value  as per the ready reckoner seems  to be much more higher in majority of the cases  than actual  price  or  consideration  for   buying  or selling  property,  flats, shops  and  offices  in Mumbai.

STAMP DUTY IN RESPECT OF VARIOUS DOCUMENTS RELATING TO PREMISES IN A CO-OPERATIVE SOCIETY

By Bankim P.Khona , Solicitor

Note : All the answers are given on assumption that the properties are situated within Greater Mumbai, because the stamp duty payable on the instrumental for immovable properties situate at different places is different.

Stamp duty on Agreement for Transfer of Share Flat :
Q.1. Is it necessary to pay the stamp duty exceeding Rs. 20/- on an Agreement for Transfer of shares in a co-operative society which gives to the Transferee the right to use and occupy a flat in a co-operative society ? If yes at what rate ?

Liability to pay Stamp Duty :
Q.2. Who is liable to pay the stamp duty in respect of the transfer of shares and flat in a co-operative  society ?

Stamp Duty as per Market Value :
Q.3. On an Agreement for Transfer of share in a co-operative society the parties have paid the stamp duty as per the value stated in the agreement. However at the time stated in the agreement. However at the time of registration of such  agreement the sub-registrar concerned insisted for the payment of the stamp duty as per the market value calculated on the basis of ready reckoned. Whether the sub-registrar can do so ? If the stamp duty is not paid as demanded by the sub-registrar whether he can impound the agreement ? In such case what remedies are liable to the Transferor and the Transferee ?

Stamp Duty on Transfer of Shop :
Q.4. At what rate the stamp duty is payable on the agreement for Transfer of a shop in a co-operative society ?

Stamp Duty on Transfer of Garage :
Q.5. At what rate the stamp duty is payable on an Agreement for Transfer of a garage in a co-operative society ?

Q.6. What is the responsibility of the managing committee and society when flat / shares are transferred in case the proper stamp duty is not paid ?

Society’s responsibility for payment of Stamp Duty :
Q.7. Whether society is responsible for payment of stamp duty on an Agreement for transfer of shares and flat in a co-operative society ?

Stamp Duty on Allotment Letters Issued by Society
Q.8. A co-operative society has purchased a plot for construction of residential building
for its members out of the funds contributed by its members. When such society issues allotment letters to its members for allotting flats how much stamp duty is payable on such allotment letters ?

Non-payment of proper Stamp Duty on previous Agreement :
Q.9. By an Agreement dated 1st March 1991 prepared on Rs 10/- stamp paper Mr. A. a member of a co-operative society in Bombay transferred his five shares and a flat to Mr. B for the consideration of Rs. 8,00,000/-. The said agreement dated 1st March, 1991 is not registered. The conveyance of the building and the land in favour of the society has yet not been executed by the builder and the owner of the land. The society admitted Mr. B as member and transferred the five shares and the flat to the name of Mr. B. By another Agreement dated 1st February, 1996 Mr. B transferred his said five shares and the said flat to Mr. C for the consideration of Rs. 13,50,000/-. The stamp duty amounting to Rs. 66,750/- has been paid on the said Agreement dated 1st February, 1996. The said Agreement dated 1st February, 1996 is duly registered with the sub-registrar concerned. Whether the said Agreement dated 1st March, 1991 is properly stamped ? If not who is responsible for payment of stamp duty on it ? Whether Mr. C can be called upon by the stamp authorities to pay the deficit stamp duty including the penalty if any on the said Agreement dated 1st March, 1991 ? In this case whether at the time of execution of the conveyance of the building and the land in favour of the society Mr. C will be required to pay and additional stamp duty in respect of his flat inspite of the fact that his Agreement dated 1st February, 1996 is duly registered ?

Stamp Duty on Exchange of Flat :
Q.10. Whether any stamp duty is payable when flats are inter-transfers within the members of these society ? Can society allows such inter-transfers without execution of proper agreement to transfer and patyment of stmap duty ?

Q.11. In view of the decision of the Bombay high Court in the case of Usha Arvind Dongre vs. Suresh Raghunuth Kotwal whether it is necessary to pay stamp duty on transfer of shares in a co-operative society ? Please also consider the judgement of the Bombay high Court in the case of Hanuman Vitamin Foods Pvt. Ltd. (AIR 1990 Bombay 204) ?

Stamp Duty on Conveyance :
Q.12. At what rate the stamp duty is payable on a conveyance of a building and the land in favour of a co-operative society by the builder and the owner of the land ? Whether the members of the society who have paid stamp duty on their respective agreement for purchase of flats are not required to pay any additional stamp duty or whether such members gets adjustment of the amount of stamp duty paid by them on their respective agreement and are required to pay the balance stamp duty based on the market value of their respective flat on the date of execution of conveyance ?

Stamp Duty on Sale of Balance F.S.I. :
Q. 13. Whether direction of Commissioner not to register the society unless the stmp duty paid by all the memebrs be challenged ? Is it not against the provisions of Maharashtra Co-operation Societies Act ?



Stamp duty on Agreement for Transfer of Share Flat :
Q.1. Is it necessary to pay the stamp duty exceeding Rs. 20/- on an Agreement for Transfer of shares in a co-operative society which gives to the Transferee the right to use and occupy a flat in a co-operative society ? If yes at what rate ?
Ans. The stamp duty payable on an Agreement for transfer of shares in a co-operative society, which gives to the transferee a right to use, occupy and enjoy a flat in a co-operative society exceeds Rs. 200/-. In the case of non-residential premises it is at the flat rate of 10% of the true market value. However, in the case of residential premises, the stamp duty payable on the agreement is as per Article 25 of the Bombay Stamp Act as under :-
“Article 25. Conveyance (not being a transfer charged or exempted under Article 59) –
On the true market value of the property which is the subject matter of the Conveyance –
(d) (1) if relating to residential premises consisting of building or unit.
(A) by, or in favour of, a co-operative housing society registered or deemed to have been registered, under the Maharashtra Co-operative Societies Act, 1960; or
(B) to which the provisions of the Maharashtra Ownership Flats (Regulation of Promotion of Construction, Sale, Management and Transfer) Act, 1963, or the provisions of the Maharashtra Apartment Ownership Act, 1970 apply; or
(C) by such society in favour of its member or incoming member whether in consequence of purchase of its shares or not; or
(D) by a member of such society in favour of another member and incoming member whether in consequence of transfer of its shares to another member or not; and the value of which –
(i) does not exceed rupees 1,00,000. -- NIL
(ii) exceeds rupees 1,00,000 but does not exceed rupees 2,50,000  -- 0.5 per cent of the value
(iii) exceeds rupees 2,50,000 but does not exceed rupees 5,00,000 – 1,250rupees plus 3 per cent of the value of above rupees 2,50,000
(iv) exceeds rupees 5,00,000 but does not exceed rupees 10,00,000  -- 8,750 rupees plus 6 per cent of the value above rupees 5,00,000
(v) exceeds rupees 10,00,000. 38,750 rupees plus 8 per cent of the value above rupees 10,00,000.
(2) if relating to land for construction of residential premises and falling under the descriptions in items (a), (c), or (d) of sub-clause section (1).  – The same duty as is applicable under sub-clause (1).

Liability to pay Stamp Duty :
Q.2. Who is liable to pay the stamp duty in respect of the transfer of shares and flat in a co-operative  society ?
Ans. The stamp duty in respect of transfer of shares and a flat in a co-operative society could be decided as regards payment by an agreement between the parties. Either one of them can agree to pay or they may agree to share in such proportion as they may agree amongst themselves. In the absence of such contract, under section 30(b) of the Bombay Stamp Act the same is payable by the transferee i.e. the purchaser.

Stamp Duty as per Market Value :
Q.3. On an Agreement for Transfer of share in a co-operative society the parties have paid the stamp duty as per the value stated in the agreement. However at the time stated in the agreement. However at the time of registration of such  agreement the sub-registrar concerned insisted for the payment of the stamp duty as per the market value calculated on the basis of ready reckoned.
Whether the sub-registrar can do so ? If the stamp duty is not paid as demanded by the sub-registrar whether he can impound the agreement ? In such case what remedies are liable to the Transferor and the Transferee ?
Ans. The stamp duty on an agreement for transfer of shares in a co-operative society is payable on the true market value of the premises being transferred. The value stated in the agreement does not determine the stamp duty payable on the same. For the sake of convenience, the State Governmetn has introduced a Ready Reckoner as the market value of the properties in Greater Mumbai. Such Ready Reckoner is not a final word. The obligation of the party to pay stamp duty is provided under the Act on the amount of the true market value. If according to the party the market value is different than the market value calculated on the basis of the rate mentioned in the basis of the rate mentioned in the Ready Reckoner then the party cab refuse to pay additional stamp duty and the sub-registrar will be required to forward the document to the Collector under section 32 (a) of the Bombay Stamp Act for determining the correct market value and the stamp duty payable on the same. In case the party does not accept the decision of the Collector then the said party can go into appeal under section 32 (B) of the Act before the Dy. Inspector General of Registration and Dy. Controller of Stamps.

Stamp Duty on Transfer of Shop :
Q.4. At what rate the stamp duty is payable on the agreement for Transfer of a shop in a co-operative society ?
Ans. A shop is non-residential premises and therefore, the concessional rates prescribed under Article 25(d) for residential premises do not apply. The stamp duty payable is 10% of the true market value of a shop, in the case of an agreement for transfer of shop in a co-operative society.

Stamp Duty on Transfer of Garage :
Q.5. At what rate the stamp duty is payable on an Agreement for Transfer of a garage in a co-operative society ?
Ans. The stamp authorities consider a garage to be non-residential and therefore, as in the case of shop stamp duty is payable at the rate of 10% of the true market value of the garage.

Q.6. What is the responsibility of the managing committee and society when flat / shares are transferred in case the proper stamp duty is not paid.
Ans. There is no responsibility on the Managing Committee and the Society when the flats/ shares are transferred without payment of proper stamp duty or any amount. It may be, however, stated that sometime back the Registrar of Co-operative Societies had issued a circular directing the societies not to transfer shares / flats unless proper stamp duty is paid. It is submitted that the Managing Committee is neither empowered nor does it possess a skill to determine the proper stamp duty payable on such an agreement.

Society’s responsibility for payment of Stamp Duty :
Q.7. Whether society is responsible for payment of stamp duty on an Agreement for transfer of shares and flat in a co-operative society ?
Ans. The Society is not responsible for payment of stamp duty on an agreement for transfer of a flat and shares in a co-operative society. The responsibility to pay the stamp duty is only that of the transferor and / or transferee.
Stamp Duty on Allotment Letters Issued by Society

Q.8. A co-operative society has purchased a plot for construction of residential building
for its members out of the funds contributed by its members. When such society issues allotment letters to its members for allotting flats how much stamp duty is payable on such allotment letters ?
Ans. In the case where a co-operative society has purchased a plot for construction of residential building for its members out of the contribution by its members, the allotment letter to its members for allotment letter to its members for allotment letter to its members for allotment of a flat does not attract any stamp duty.

Non-payment of proper Stamp Duty on previous Agreement :
Q.9. By an Agreement dated 1st March 1991 prepared on Rs 10/- stamp paper Mr. A. a member of a co-operative society in Bombay transferred his five shares and a flat to Mr. B for the consideration of Rs. 8,00,000/-. The said agreement dated 1st March, 1991 is not registered. The conveyance of the building and the land in favour of the society has yet not been executed by the builder and the owner of the land. The society admitted Mr. B as member and transferred the five shares and the flat to the name of Mr. B. By another Agreement dated 1st February, 1996 Mr. B transferred his said five shares and the said flat to Mr. C for the consideration of Rs. 13,50,000/-. The stamp duty amounting to Rs. 66,750/- has been paid on the said Agreement dated 1st February, 1996. The said Agreement dated 1st February, 1996 is duly registered with the sub-registrar concerned. Whether the said Agreement dated 1st March, 1991 is properly stamped ? If not who is responsible for payment of stamp duty on it ? Whether Mr. C can be called upon by the stamp authorities to pay the deficit stamp duty including the penalty if any on the said Agreement dated 1st March, 1991 ? In this case whether at the time of execution of the conveyance of the building and the land in favour of the society Mr. C will be required to pay and additional stamp duty in respect of his flat inspite of the fact that his Agreement dated 1st February, 1996 is duly registered ?
Ans. The Agreement dated 1st March, 1991 which is prepared on Rs. 10/- stamp paper is not properly stamped. The agreement was required to be stamped with the amount at the rate prescribed under Article 25(d) of Schedule I to the Bombay Stamp act. On the amount of Rs. 8 lakhs being the true market value, on 1st March, 1991 for the said agreement the stamp duty payable was Rs. 33,000/-. The responsibility to pay the stamp duty was that of the transferor and / or  transferee. I.e. MR. A. and / or MR. B as per their agreement with regard to the payment of stamp duty and in absence of such an agreement the responsibility was that of Mr. B, the transferee, Mr. C. who has agreed top purchase the said shares and the premises is not liable to pay any stamp duty and in absence of such an agreement the responsibility was that of  Mr. B, the transferee, Mr. C. who has agreed to purchase the said shares and the premises is not liable to pay any stamp duty and / or penalty on the said agreement dates 1st March 1991. The authorities cannot recover the same from Mr. C. In the case of convyance of property where stamp dutyis paid and agreement is registered no additiopnal stamp duty will have to be paid for the said flat.

Stamp Duty on Exchange of Flat :
Q.10. Whether any stamp duty is payable when flats are inter-transfers within the members of these society ? Can society allows such inter-transfers without execution of proper agreement to transfer and patyment of stmap duty ?
Ans. Inter se transfer of flats among the members of the society is an exchange and the stamp duty shall be paid as per Article 32 of Schedule I to the Bombay Stamp Act. The Stamp duty payable on the exchange and the stamp duty shall be paid as per Article 32 of Schedule I to the Bombay Stamp Act. The stamp duty payable on the exchange is as per conveyance i.e. payable under Article 25(d) of Schedule I to the Bombay stamp Act. It is necessary to execute a Deed of Exchange for transfer of flats among the members. The Deed of Exchange will be required to be stamped at the concessional rate under Article 25(d) of Schedule I to the Bombay Stamp Act.

Q.11. In view of the decision of the Bombay high Court in the case of Usha Arvind Dongre vs. Suresh Raghunuth Kotwal whether it is necessary to pay stamp duty on transfer of shares in a co-operative society ? Please also consider the judgement of the Bombay high Court in the case of Hanuman Vitamin Foods Pvt. Ltd. (AIR 1990 Bombay 204).
Ans. The judgement of the Bombay High Court in Usha Arvind Dongre vs. Suresh R. Kotwal (1991 CT). 507) was in the matter was discussed therein and decided under the provisions of section 17(1) (d) of the Indian Registration Act. The issue of stamp duty was not involved and, therefore, the provisions of the Bombay Stamp Act were not gone into in the said judgement. The said judgement was delivered by a single Judge of the Bombay High Court, whereas the judgement in the case of  Hanuman Vitamin Foods Pvt. Ltd. (A.I.R. 1990 204) was specifically on the issue involving the stamp duty payable on the agreement in the case of sale of shares of the Co-operative Society and the flat. According to the said decision, the stamp duty is payable on such agreement for sale of shares wherein a right to use and occupy the flat and premises is attached to the ownership of shares. The said decision was of a Division Bench and therefore, in view of the decision in the case of Hanuman Vitamin Foods Pvt. Ltd. The stamp duty is payable on the transfer of shares in a co-operative society.

Stamp Duty on Conveyance :
Q.12. At what rate the stamp duty is payable on a conveyance of a building and the land in favour of a co-operative society by the builder and the owner of the land ? Whether the members of the society who have paid stamp duty on their respective agreement for purchase of flats are not required to pay any additional stamp duty or whether such members gets adjustment of the amount of stamp duty paid by them on their respective agreement and are required to pay the balance stamp duty based on the market value of their respective flat on the date of execution of conveyance ?
Ans. The stamp duty payable on a conveyance of a building and the land thereunder in favour of a co-operative society by the builder and / or the owner of the land shall be paid on the true market value of each unit viz., flat, shop etc. All non-0residential units will attract stamp duty at 10% of the true market value and the documents in respect of each residential unit viz., flat, flat etc., (other than shop) will be required to be, stamped at the concessional rate as provided under Article 25 (d) of Schedule I to the Bombay Stamp Act. However, for the purpose of calculating the market value the date of the agreemetn will be concsiderd and not the date of conveyance; and that the stmp duty will be at the rate prevalent at the date of the conveyance and not the date of the agrement of the flat purcahsed.

Stamp Duty on Sale of Balance F.S.I. :
Q.13. Whether direction of Commissioner not to register the society unless the stmp duty paid by all the memebrs be challenged ? Is it not against the provisions of Maharashtra Co-operation Societies Act ?
Ans. It is difficult to correctly opine or reply to this query. But in my humble opinion it is an obligation and duty of every citizen to pay requisite stamp duty on the agreement to purchase a flat and therefore the agreement which is not properly stamped cannot be taken into consideration the direction given by the Commissioner not to register such Society unless all person have paid stamp duty on their respective agreement may not be invalid. The direction given by the Commissioner asking all the intending members to comply with the provisions of the Bombay Stamp Act and pay stamp duty could not be considered against the provisions of the Maharashtra Co-operative Societies Act. 1960.

Registration made compulsory

Registration of immovable property is now compulsory. Union Cabinet decision on this is firm. This will ensure legal transfer or sale of immovable properties, also the area restriction is a compulsion. Earlier registration could be done at Mumbai, Chennai, Calcutta or Delhi depending upon which of the places has a lower rate for registration. This resulted is loss of revenue to the state.
Registration Act, Transfer of Property Act and the Indian Stamp act are also to be amended. A legislation to this effect is soon to be brought to the next parliament session.
The Indian Stamp Act is to levy a a certain percentage on stamp duty for contracts. The registration for property is 1 % or Rs. 10,000/- which ever is higher.
All and all this move by Union Cabinet will definitely curb the illegal / forced registration in the future.


Registration Fee

The Registration Fee and Stamp Duty Payers Association has brought to the notice of the Honourable Minister for Revenue as well as the Inspector General of Registration that as of date franking facilities are available to the residents of the Mumbai at Town Hall, Shaheed Bhagat Singh Road, Near Reserve Bank of India, Mumbai – 400023 and at MMRDA Building, Bandra Kurla Complex, Bandra (East), Mumbai – 400051. It has been the suggestion of the Association that franking facilities should be available at the central Suburbs also. In this connection, the Association has also pointed out that as of date, franking facilities are available at the Central Suburbs also. In this connection, the Association has also pointed out that as of date, franking facilities are available at only two places i.e. Mumbai City and in Western Suburb. No facility for payment of Stamp Duty within a few kilometers distance is available to the lakhs of residents between Dadar to Mulund and Wadala to Mankhurd. As a result of the same, huge amount of cash to be carried out by the members residing in the Central Suburbs.

The Association has been given to understand that having regards to the practical difficulties faced by the residents of the Central Suburbs, the authorities are considering installation of franking machine at Ground floor at the Chembur office in the month of April 2000. The address of the Sub Registrars Office is Ground floor, New Administrative Building, Phase II, Ramkrishna Chemburkar Marg, Near Chembur Fine Arts Hall, Chembur (East), Mumbai – 400071. When the franking facilities would start at Chembur, it would be a big relief to the Stamp Duty Payers at Central Suburbs.

The Association also requests the authorities to accept the cash at all the office upto a sum of Rs. 50,000/-. At present only cash upto Rs 25,000/- is accepted by the authorities. The Association also requests the authorities that they should deliver the franked documents on the same day to the parties so that they should deliver the franked documents on the same day to the parties so that the mental related transactions, the parties executed the documents only after the proper stamp duty has been paid on the documents.
The Association had through its press release in 1999 requested the authorities that the map of various places in Maharashtra as well as the market value of various localities of Maharashtra should be available to the common man through the medium of internet. The Association is given to understand that the website with the market value of property will be available on the Internet very shortly.

The Association further states that on account of the recent amendments to the Rent Act all transactions relating to rental premises will have to be compulsorily registered. This will increase the pressure of work at the Sub Registrars for the city of Mumbai. It is not surprising to find that because of heavy work load a lot of pressure is there on the Sub-Registrars. At times, one has to spend more than five hours just to register a document. Also the precious time of the Tax payers is wasted in complying with the bureaucratic formalities. The stamp duty rates for transfer of tenancy as per Article 5 (g-d) of the Bombay Stamp Act 1958 are the same for all the areas of the city of Mumbai which is Rs. 1,000 per sq.metre for commercial premises and Rs. 100/- per sq.metre for residential premises. There is a wide-up gap in the prevailing prices at Nariman Point, Peddar Road, Govandi & Charkop. Yet from the stamp duty point of view on transfer of tenancy the stamp duty liability is the same. The Association herewith requests the newly appointed Inspector General of Registration Shri Bhoge to reduce the hardships of the common man and take pragmatic steps to simplify the Bombay Stamp Act 1958 and appoint more staff at the Sub Registrars Office to reduce the hardships of the tax payers.

Stamp duty not applicable to paying guest

By M K Gokhale
Dy. Superintendent of Stamps (Retd)

A Member of the Housing Society referred a question for answer whether the license agreement is mandatory for the paying guests and if so what is the value of the stamp duty ?

Sub. Section (5) of Section 7 of the Maharashtra Rent Control Act, 1999, defines the "Licensee" in respect of any premises or any part thereof, means the person who is in occupation of the premises or such part, as the case may be, under a subsisting agreement for license given for a license fee or charges, and includes any leased to a Co-op. Housing society registered or deemed to be registered under the Maharashtra Co-op. Societies Act, 1960, but does not include a paying guest, a member of a family residing together, a person in the service or employment of the licensor, etc.

If the paying guest is staying with the member there is no question of parting with the possession of the Flat.

From the aforesaid definition, it is very clear that the provisions of the Maharashtra Rent Control Act, 1999 are not applicable to the 'Paying Guest'.

I am therefore of the view that the paying guest is staying in the premises along with the licensor and he or she has not possession of the premises or part thereof, such paying guest cannot considered as "Licensee" under the Maharashtra Rent Control Act, 1999 and therefore need not require to execute any License Agreement and therefore the question of payment of Stamp Duty does not arise.

I may mentioned that paying guest and licensor must be shown to be residing in the same premises as required under Section 5(4A) as different from licensee where expression of such requirement are absent paying guest not being a Licensee cannot claim, rights as contemplated under Section 15A [1988-2 BOM.C.R. 300 (S.C.) Surendra V. Royce.]

Stamp duty setback allowed

By Vimal Punmiya, Chartered Accountant

Important amendment with regard to factual position under the Bombay Stamp Act, 1958 relating to the provisions of investment : -

By virtue of ordinance no. Mah. Ord. II of 2005 dated 7th May 2005 wherein, a new article is introduced namely 5(g-d) (ii) :- 

“(ii) if relating to the purchase of one or more units in any scheme or project by an investor from a developer Same duty as is leviable on conveyance under clause (a), (b), (c), or (d), as the case may be of Article 25 on the market value of the unit”

For the purpose of this clause, the investments in the unit shall include a flat, apartment, tenement, block or any other unit by whatever name called, as approved by the Competent Authority in the building plan.

By virtue of above amendment in the said Article, the purchase would get a set off of Stamp Duty to the extent of the amount of Stamp Duty paid by the seller, on the second document of conveyance made by the purchaser and if no duty is required to be paid, then the minimum duty for the conveyance shall be Rs. 1,000/-. The said amendment can be explained with the help of an illustration which is as under :-

1)   Mr. A who purchased a Flat for Rs.  Lacs whereby, Stamp Duty paid by Mr. A on the consideration of Rs.  Lacs was Rs. 33,750/- as per the rates applicable under the Bombay Stamp Act, on conveyance of the said flat within three years, when Mr. B purchases said flat for Rs. 112 Lacs consideration then Stamp duty payable by Mr. B on 11 lacs  consideration would be Rs. 38,750/- but, Mr. B would be liable to pay only Rs. 5,000/- as he would get a set off of Rs. 33,750/- which is duly paid by Mr. A initially on the Agreement duly entered by him/.

However, alternatively if Mr. A, sells the said flat to Mr. B, for Rs. 10 Lac only then, although the Stamp duty of Rs. 33,750/- has already been paid by Mr. A, then, on the second transaction, Mr. B would be liable to pay only Rs. 1,000/- as the consideration involved is same.

Adjudication of Proper Stamp Duty
By M.K. Gokhale, Deputy Supt. Of Stamps (Retd.)

Section 31 of the Bombay Stamp Act, 1958 provides about the adjudication of proper Stamp Duty. The applicant under this section has to submit an instrument executed or unexecuted and previously stamped or not for the purpose of opinion to the collector of stamps and for this purpose, the applicant has to pay a fee of Rs. 50/-. On receipt of the application of adjudication and the instrument, the collector has to form his opinion as regards its chargeablity and then express his opinion to the applicant. Sub Section (4) of Section 32 of the Act proves that when the instrument is brought to the collector for adjudication within one month from the date of its execution, the person liable to pay stamp duty within 60 days form the date of service of the notice of demand in respect of the stamp duty adjudicated by the collector. If the applicant failed to pay the said stamp duty within the stipulated period of 60 days, the person is liable to pay a penalty at the rate of two percent per month or part thereof, from the date of execution of such instrument.
It is therefore necessary to pay stamp duty within 60 days from the date of the demand notice served by the collector to avoid levy of penalty.
In view of the penal provision in sub-section (4) of section 32 of the Act, the applicant should take care to submit the unexcelled document for adjudication under section 31 of the Bombay Stamp Act, 1958. In case of unexecuted instrument the collector has no power to levy penalty and if the applicant does not agree with the determination of Stamp Duty, he can withdraw his document from adjudication.


National Co-op. Hsg. Fed. Conference moots exemption of stamp duty and registration fee
By A.T. Bureau

The 19th Conference of the Chief Executive of apex Co-operative Housing Federation, organised by the National Co-operative Housing Federation of India on 20th May 2000, at Kochi, urged the State governments to (I) exempt housing co-operative from payment of stamp duty and registration fee (ii) contributed liberally towards the share capital of their respective apex. Federations so as to strengthen their financial base thereby enabling  them to raise their borrowing power and (iii) allot 30% of the acquired land for housing purpose to housing co-operatives.
The following are some of the recommendations made by the conference.
* The LIC, NHB and HUDCO should be allocated more funds to housing co-operatives in order to enable them to meet the targets smooth under the two million housing programme
* The National Housing Bank should reduce its rate of interest from 12.0% to 11%.
* The NHB should contribute towards share capital of apex Federations to raise refinance upto 12 times of their net owned funds.
HUDCO should provide loans to apex federations on the basis of security of floating charge. It should not charge processing fee and front end fee from apex federations. It should reduce interest rate by 1% on block loans to apex Federations.
* The State Governments, which have so far, not constituted special committees on housing co-operatives in their respective States, should be requested to do so immediately. The conference was presided over by Shri S.N. Sharma, Chairman NCHF, who is a Minister in the Madhya Pradesh Ministry.
In his speech, Shri Sharma said that in line with the National Agenda, a two million housing programme has been launched since 1998-1999 under which, the Union government has fixed a target for co-operative sector to build one million houses each year predominantly for weaker sections and low income groups in the country. He informed the conference that during the year 1998-99 housing co-operatives completed the construction of about 17,000 units in urban areas with the loan assistance received from the apex federations. He proudly mentioned that the progress made by co-operatives during 1998-99 was well appreciated by the Government of India.
* Shri Sharma advocated for the Policy Support to housing co-operatives as envisaged in the National Housing and Habitant Policy in order to achieve the targets for house construction smoothly and efficiently besides adequate flow of funds from LIC, NHB and HUDCO allocation of 30% of land acquired for housing purpose by State Government exemption from payment of stamp duty and registration fee, proper legal frame work and liberal contribution in the share capital of apex Federations by State Governments.
Shri Sharma also said that the separate model law on Housing co-operatives, prepared in association with NCHF, was still under the consideration of the government of India. Efforts were being made to set it finalised early so as to provide proper legal frame work to housing co-operatives for their smooth functioning. He pointed out that funds raised by apex Federations from funding agencies had become expensive to members of housing cooperatives compared to the prevalent interest rate on housing finance offered by other agencies. In this connection, he referred to the interest rates offered by the LIC and NHB, which were still on higher side.

Registration fee & stamp duty payers association’s stand only Leave & Licence
By A.T. Bureau

As per Section 55 of The Maharashtra Rent Control Act, 1999 Registration of Leave and Licence Agreement has been made compulsory with effect form 31/03/2000. The Registration Fee and Stamp Duty Payers association along with various property related associations had filed their objection for the stamp duty on refundable deposits as well as levy of Stamp Duty on Leave and Licence Agreement Representatives of the Association had met the Honourable Chief Minister Shri Vilasrao Deshmukh, the Honorable Revenue Minister Shri Ashok Shaven as well as the Senior Officers at Mantralaya. The difficulties being faced by the stamp duty payers were brought to the 2000/2120/CR/592/M-I  has been issued stating that a token registration fee of Rs. 1,000/- would be levied on Leave and Licence Agreement if the property is situated in Municipal Corporation limits and of Rs. 500/- if the property is situated in the other areas irrespective of the deposits, type of the premises or size of the premises. According to the verbal information receive from the authorities Leave and Licence Agreement has to be stamped on Rs. 20/-. However no mention is made about levy of stamp duty in the abovesaid Notification. This could give power to the authorities to interpret the documents as that of Lease. It is the belief of the Association that Professionals would advise their clients to draft agreements of Leave and Licence with renewal clauses rather than drafting lease agreements so that the tax payers can save money on payment of stamp duty. The Government could loose crores of rupees because of drafting error. This is on our opinion is a legal loopholes which will have to be plugged by the authorities.
The above Notification dated 8/6/2000 proposes to levy Registration Fee of Rs. 1,000/- or Rs. 500/- depending on the place where the property is situated from the date of publication of the Gazette. The Maharashtra Rent Control Act,  2000 has come into effect from 31st March, 2000 and all those persons who have executed the documents between 31/3/2000 & 8/6/2000 could unnecessarily be penalized. This definitely had not been intention of the Government.
With the registration of Leave and Licence being made compulsory it would not be surprising that the cash stripped Municipal Corporations would collect information about Leave and Licence Agreements and start issuing notices for levy of higher property tax to the owners of property which have been given on Leave and Licence. The Licensor has to pay not only excess property tax, but also society non-occupancy charges as well as income tax on the income.
The Association appreciate the steps taken by the Revenue Authorities of charging less amount as Registration Fees as well as willingness to accept the practical suggestions being made by the various property related associations with regards to Leave and Licence Agreement. However a written clarification from the Revenue Department stating that the stamp duty of Rs. 20/- only will be levied on Leave and Licence Agreement will be of immense help in clarifying the above said issue.
The Registration Fee and Stamp Duty Payers Association is thankful to the media for expressing the views of the members of the public particularly the Real Estate Community as regards levy of Stamp duty on Leave and Licence Agreement.

PAYMENT OF STAMP DUTY
By A.T. Bureau

The Registration Fee and Stamp Duty Payers Association has brought to the notice of the Honourable Minister for Revenue as well as the Inspector General of Registration that as of date franking facilities are available to the residents of the Mumbai at Town Hall, Shaheed Bhagat Singh Road, Near Reserve Bank of India, Mumbai – 400023 and at MMRDA Building, Bandra Kurla Complex, Bandra (East), Mumbai – 400051. It has been the suggestion of the Association that franking facilities should be available at the central Suburbs also. In this connection, the Association has also pointed out that as of date, franking facilities are available at the Central Suburbs also. In this connection, the Association has also pointed out that as of date, franking facilities are available at only two places i.e. Mumbai City and in Western Suburb. No facility for payment of Stamp Duty within a few kilometers distance is available to the lakhs of residents between Dadar to Mulund and Wadala to Mankhurd. As a result of the same, huge amount of cash to be carried out by the members residing in the Central Suburbs.
The Association has been given to understand that having regards to the practical difficulties faced by the residents of the Central Suburbs, the authorities are considering installation of franking machine at Ground floor at the Chembur office in the month of April 2000. The address of the Sub Registrars Office is Ground floor, New Administrative Building, Phase II, Ramkrishna Chemburkar Marg, Near Chembur Fine Arts Hall, Chembur (East), Mumbai – 400071. When the franking facilities would start at Chembur, it would be a big relief to the Stamp Duty Payers at Central Suburbs.
The Association also requests the authorities to accept the cash at all the office upto a sum of Rs. 50,000/-. At present only cash upto Rs 25,000/- is accepted by the authorities. The Association also requests the authorities that they should deliver the franked documents on the same day to the parties so that they should deliver the franked documents on the same day to the parties so that the mental related transactions, the parties executed the documents only after the proper stamp duty has been paid on the documents.
The Association had through its press release in 1999 requested the authorities that the map of various places in Maharashtra as well as the market value of various localities of Maharashtra should be available to the common man through the medium of internet. The Association is given to understand that the website with the market value of property will be available on the Internet very shortly.
The Association further states that on account of the recent amendments to the Rent Act all transactions relating to rental premises will have to be compulsorily registered. This will increase the pressure of work at the Sub Registrars for the city of Mumbai. It is not surprising to find that because of heavy work load a lot of pressure is there on the Sub-Registrars. At times, one has to spend more than five hours just to register a document. Also the precious time of the Tax payers is wasted in complying with the bureaucratic formalities. The stamp duty rates for transfer of tenancy as per Article 5 (g-d) of the Bombay Stamp Act 1958 are the same for all the areas of the city of Mumbai which is Rs. 1,000 per sq.metre for commercial premises and Rs. 100/- per sq.metre for residential premises. There is a wide-up gap in the prevailing prices at Nariman Point, Peddar Road, Govandi & Charkop. Yet from the stamp duty point of view on transfer of tenancy the stamp duty liability is the same. The Association herewith requests the newly appointed Inspector General of Registration Shri Bhoge to reduce the hardships of the common man and take pragmatic steps to simplify the Bombay Stamp Act 1958 and appoint more staff at the Sub Registrars Office to reduce the hardships of the tax payers.

Stamp Duty on Leave & License Agreement
By Bankimchandra Khona, Solicitor

Under Section 55 of The Maharashtra Rent Control Act, 1999, now even an Agreement for Leave & Licence needs to be registered.  Therefore, the question of payment of stamp duty on Leave and Licence Agreement arises. There is no specific provision made for payment of stamp duty on Leave & Licence Agreement under Schedule I of the Bombay Stamp Act, 1958.  Hence the stamp duty of Rs.20/- becomes payable under Article 5(h) of Schedule I of Bombay Stamp Act.

 2. It has been stated that Stamp Authority / Registration Authority proposes to levy stamp duty by treating a Leave & Licence Agreement as a Lease and to levy stamp duty as per Article 36 of Schedule I of the Bombay Stamp Act.  Article 36 of Schedule I of Bombay Stamp Act is with regard to the stamp duty payable on a lease.  There is no mention therein whatsoever about a Leave & Licence Agreement.

3.  Can Stamp and Registration Authorities equate Leave & Licence with a Lease ?  Can the Authorities, therefore, insist on levying stamp duty on a Leave & Licence Agreement  not  Rs.20/- but as per Article 36 depending upon the period of the Licence ?  There will be a vast difference in payment of stamp duty as per Article 36 of Schedule I of the Bombay Stamp Act and as per Article 5 (h).

4. It is respectfully submitted that the Leave & Licence and Lease / Tenancy Agreement are two entirely different kinds of document which have different legal implications and effect.

5. The Lease is defined u/s. 105 of the Transfer of Property Act, which reads as under :-
“105.  Lease defined.- A lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.

6. A Licence is defined u/s. 52 of the Indian Easements Act, 1882.  The said Section 52 reads as under :
“Where one person grants to another, or to a definite number of other persons, right to do, or continue to do, in or upon the immovable property of the grantor, something which would, in the absence of such right be unlawful and such right does not amount to an easement or an interest in property, the right is called Licence”.
 
Lease and Licence are defined under two different statutes.
 
7. The essential distinction between a Lease and a Licence is that in a Lease, there is transfer of interest in the property while in the case of licence, there is no such transfer although the Licensee acquires only a personal right to occupy the property.  This principle has been confirmed by number of High Courts and Supreme Court judgements (AIR 1968 S.C. 175 (178), AIR 1989 S.C. 1816 (1990), Second Law Report 381, etc.).

8. U/s. 56 of the Easements Act, a Licence is personal and  the Licence cannot be transferred by the Licensee, whereas Lease, except in the case where Bombay Rent Act is applicable, is transferable.  Under Section 108(B)(j) of the Transfer of Property Act, the Lessee is not only entitled to transfer his leasehold right but can also mortgage or sub-lease the whole or any part of his interest in the property, whereas the Licensee cannot transfer or mortgage or grant sub-license to any person.  The Licensee cannot  sue a stranger in his own name, whereas the Lessee is entitled to sue a stranger on his own name.  The License is revocable by the Licensor under Section 60 of the Easements unless it falls within two exceptions mentioned in that Section, the Lease is not by the Lessor.  The licence comes to an end when the Licensor makes an assignment of his interest in the property, whereas a lease continue to be valid and binding on the Assignee of the Lessor when the Lessor assigns and transfers his interest in the property which is called a transfer of “reversionary right”.
 
9. Now U/s. 7 of Maharashtra Rent Control Act, 1999, the licence and tenancy are separately defined. The licence is defined under the Rent Act u/s. 7(5), and the tenancy is defined u/s. 7(15) of the said Act.

10. The basic test to distinguish a Lease from Licence is the intention of the parties.
 
11. Explanation B of Section 24 the said Rent Act,  states that an Agreement of Licence in writing shall be conclusive evidence of the facts stated therein.    In view of Explanation (B) to Section 24, once it has been mentioned in an Agreement that same is Leave & Licence Agreement, then it is a conclusive evidence of the fact that it is a Licence and not a Lease and that intention of the parties is to have a licence and not a lease.  In view of the said provision, now it is not open for anybody much less Stamp Authority to contend when Agreement is of Leave & Licence that the same is Lease.                                                        In case of licence for residential premises, Owner/Licensor is entitled and has to proceed u/s. 24 of the said Act, whereas in tenancy agreement for recovery of possession, the Lessor is entitled to initiate ejectment proceedings under Chapter IV of the Rent Act and under Section 33 of the said Act has to file a suit in the Court of Small Causes at Mumbai .Therefore, there are two different  provisions under the Rent Act in respect of the recovery of possession by the Licensor and by the Landlord/Lessor.  There are other various provisions under the Rent Act where distinction is made between the Agreement of Tenancy and the License.

12. In case of recovery of possession by the Lessor or Landlord to which provisions of said Maharashtra Rent Control Act applies, will have to file a suit for ejectment in Small

Causes Court only.   Whereas in case of licence of a residential premises, the proceedings are to be taken u/s. 24 before the Competent Authority.

13. In view of Explanation B to Section 24 of the Rent Act, once the document states that it is a licence granted by the Licensor to the Licensee, it is conclusive proof that it is a licence and that it was the intention of the parties that it has to be  Licence and not Lease.  Such document will be covered by the Easements Act, the Licensee will not be entitled to transfer, mortgage, grant sub-licence.  The licence, on the death of Licensee, will come to an end.  It is submitted that in such circumstances, the licence being personal permission, it is not open for Stamp Authorities to say that even though Agreement is of Leave & Licence but it could be construed as a Lease.  it is respectfully submitted that Stamp Authority in view of specific provision of Explanation 24 of Rent Act cannot treat a Licence as Lease on the ground that document is not licence but in fact it is lease.

14. The interest and right of a lessee or tenant are heritable under the Transfer of Property Act as also under the Bombay Rent Act.  But the right to use premises is not heritable in case of Leave & Licence.   On the death of a Licensee, his heirs will not inherit a right as a Licensee to use the premises.  Therefore, considering the definition of the Lease and Licence,  both are different under all relevant Acts. Both Agreements have different meanings, legal effects and consequences. It is abundantly clear that lease and/or tenancy agreement is  distinct from Leave & Licence Agreement. One cannot treat a Leave & Licence Agreement as a Lease and claim stamp duty as per Article 36 of Schedule I of Bombay Stamp Act.

Stamp Duty on tenancy Agreement and
Leave & Licence Agreement

By Bankimchandra P.Khona

From 1st April, 2000 a Tenancy Agreement and a Leave  & licence Agreement under section 55 of the new Rent Act are required to be in writing and registered.
Question will arise as to payment of stamp duty on such Tenancy Agreement and Leave and licence agreement First we will consider the provisions of Tenancy Agreement.
Agreement of monthly tenancy will be required to be stamped under Article 36A(I) of Schedule 1 of the Bombay Stamp Act. The stamp duty leviable shall be same as is leviable on conveyance under clauses a, b, c or d as the case may be of Article 25 for the whole amount of rent payable or the amount of average annual rent, whichever is lower. It is possible to interpret Article 36A(1) of Schedule 1 of Bombay Stamp Act in two different manner. In case of monthly tenancy, is it amount of average annual rent or is it only monthly rent required to be ascertained and on such average annual rent or monthly rent stamp duty will be payable as per the applicability of clause a,b,c,d or e of the said Article 25 of Schedule 1 of Bombay Stamp Act ? The words used in the said Article is for the whole amount of rent payable or amount of average annual rent whichever is lower. It is submitted that  the monthly tenancy is for a month and continue till it is terminated. Therefore, the period of tenancy is only a month and stamp duty should be calculated on a monthly rent and not on average annual rent. In case of Mumbai, for (a) the non-residential premises and (b) the residential premises which are not part of a co-oeprative housing society building or to which Maharashtra Apartment Ownership Act, 1970 does not apply Stamp Duty is 10%. However, in case of residential premises of a building belonging to a co-operative housing society or the premises to which Maharashtra Apartment Ownership Act, 1970 applies Stamp Duty shall not be 10 per cent but as per the schedule of Stamp Duty which is lower and wherein the maximum rate is 8 per cent. In short, Article 36 of Schedule I of the Bombay Stamp Act will cover the payment of Stamp duty on monthly tenancy agreement.

It may be pointed out that under Article 36, in addition to the Rent, if any fine or premium or money is advanced or to be advanced in addition to the rent fixed, then on such fine or premium or money advanced or to be advanced, additional duty is payable as per Article 25 of Schedule I of Bombay Stamp Act, i.e. 10 per cent in case of non-residential premises and residential premises which are not within the co-operative housing society buildings or the premises to which the provisions of Maharashtra Apartment Act does not apply and in case the premises of a building of a co-oeprative housing society or to which the Apartment Act, applies, the concessional rate as state hereinbefore shall apply.
Explanation I of Article 36 provides that rent paid in advance shall be deemed to be premium or money advanced within the meaning of said Article. Therefore, any rent paid in advance will be considered as premium or money advanced and on the same, stamp duty at aforesaid rates will be required to be paid.
Explanation II of said Article further provides that if the tenants agrees to pay recurring charges such as Government revenues, the landlords’ share of municipal rates or taxes which are required to be paid by the landlord, then such amount shall also be deemed to be part of rent and naturally such rate or taxes or shares will attract stamp duty at the aforesaid rates of 10 per cent or concessional rate of depending upon the nature of the premises.
Some times the question arises as to what happens to the interest-free security deposit. Will they be considered as fine or premium ?
Will any stamp duty be payable on the same ?
We are told that Stamp Authorities consider the income which the landlord will earn of the said security deposit as rent and such yearly income is being added to the rent and the stamp duty is claimed by the stamp authorities on such amount. In our respectful submission, there is no provision under the Stamp Act to recover any stamp duty on interest free security deposit which is required to be returned on the determination of tenancy or any income which would be earned out on the same or any assumed income. There is a provision for recovery of such stamp duty and therefore by any letter or order or circular or notification, stamp duty authorities cannot claim or recover any stamp duty. It is being said that there is internal letter or circular for recovery of such stamp duty. It is submitted that under no letter or writing or circular such recovery can be made as stamp duty unless the same squarely falls within any one or more Articles of Schedule I of Bombay Stamp Act. Therefore, in our opinion, no extra stamp duty could be levied for interest-free security deposit which is required to be returned at the determination of tenancy or before that. Such deposit is neither fine nor premium nor any amount advanced.
It is also being claimed or said that under the provisions of Article 5(g-d), stamp duty is payable on the are of the tenanted property. The said Article 5 (g-d) applies in a case where tenancy rights are being transferred by a tenant himself. The said Article 5(g-d) has no application when landlord creates tenancy in favour of a tenant. It is submitted that Article 5(g-d) has no application in case of new tenancy agreement between the landlord and tenant.
In short, stamp duty will be payable either at 10 per cent or at concessional rate only on the consideration of rent received or fine or premium paid or any money advanced or to be advanced or payment of share of the landlord to Government Revenue, cess, municipal rates or taxes.

Now we will consider payment of stamp duty on Leave & Licence Agreement
Leave & Licence Agreement and the Tenancy Agreement are both different types of Agreement. The tenancy agreements are governed by the Transfer of Property Act and the Maharashtra Rent Control Act. The Maharashtra Rent Control Act. The Leave and Licence Agreement are governed by the Easement Act and Maharashtra Rent Control Act. The Maharashtra Rent Control Act also distinguishes between Leave and Licence Agreement are governed by the Easement Act and Maharashtra Rent Control Act. The Maharashtra Rent Control Act also distinguishes between Leave & Licence Agreement and Tenancy Agreement and therefore both of them are not same.
We are told that Stamp Authorities apply Article 36 of Schedule I of Bombay Stamp Act and claim of stamp duty on Leave & Licence Agreements. In our humble opinion, Article 36 of Schedule I of Bombay Stamp Act cannot and does not apply to Leave and Licence Agreement. Leave and Licence Agreement falls within Article 5(h) of Schedule I. As there is no such specific provision of Leave & Licence Agreement under Schedule I, Article 5(h) will apply and only stamp duty of Rs. 20/- is required to be paid. No stamp duty could be recovered under Article 36 of Schedule I of Bombay Stamp Act. Such a demand is not legally valid. Leave & Licence Agreement will attract Stamp duty of Rs. 20/- only irrespective of period of Licence, Licence fee, Security Deposit, advance payment of compensation or Licence fee or payment of share of Taxes and cess payable by the Licensor.

____________________________________________________________

XII.IF SOCIETY IS FORMED OF GROUP OF FLATS/HOUSES,

 LAWS GOVERNING SUCH SOCIETY ARE GIVEN BELOW TAKING MAHARASHTRA LAWS AS MODEL FOR JUST INFORMATION

Click on captions below to be taken to the respective page in the web:-

Sinking fund, its propriety, utilisation, investment and withdrawal thereof

> DOCUMENTS TO KEEP AS “PERMANENT RECORD” BY SOCIETY/OWNER

> Builders cannot charges Transfer fees

> Can society be formed without consent of the builder ?

> Can Society refuse transfer of flat ?

> Can Society transfer the Share Certificate in the name of the nominee in spite of objections from legal heirs !

> Car parking

> Formation of Co-operative Housing Society

> Any other matter with the permission of chair 

> Amendments to the Maharashtra co-operative society act, 1960. Mahrashtra Act No. VII of 1997.

> Payment for the lift by members of the society

> Register your society this way

> Solutions to Conveyance Problems

> EXPULSION OF A MEMBER

> Formation of Co-operative Housing Society

> Limit fixed for transfer fee, Donation or any other charges not allowed

> Nominee is a mere trustee

> Non Occupancy Charges can not be more than 10%

> Salient Features of the Model Bye-Laws

> Sinking fund, its propriety, utilisation, investment and withdrawal thereof

> Society dues in following circumstances cannot be recovered under section 101 of M.C.S. Act, 1960.

> CAN OCCUPANCY RIGHTS IN OWNERSHIP FLAT BE TRANSFERRED OR ATTACHED

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For Karnataka Land Conversion Rules CLICK HERE

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XIII. DETAILS ABOUT Home Loans

There are several features of a Home loan that you must consider based on an analysis of your specific needs. 

How much can you afford? 

As the investment in a home does not yield any monthly income, (unless you have rented out the home) your ability to repay the loan depends entirely on your salary or regular income from a stable business. Finance companies would normally give you a loan to the extent that your monthly repayments are less than 35-50% of your gross monthly salary. 

How much must you leverage? 

Having found a Rs. 10 lac property that you want to buy, you must decide how much of the cost can be funded by a loan. 

Normally Housing Finance Companies will loan you about 80-85% of the property value. You need to make a minimum down payment of 15-20% of the property value. Please also remember that you have to normally bear the following fixed costs before your loan is disbursed: 

    1. Processing and administrative fee (1.5-2% both included)
    2. Legal fees
    3. Stamp duty charges ( for resold property)
    4. Property insurance premium
    5. Accident insurance premium
Make sure that You have an asset base that is easily converted to cash (e.g. cash in a Bank FD etc.) to cover all charges including down payment. 

As the value of the loan amount increases, the interest rate charged usually also increases. You may feel tempted to take a smaller loan by funding the large down payment (the difference between the value of the property and the loan you have applied for), by withdrawals from other investments. If your investments are in Fixed Deposits that are giving you about 11% p.a (about 7.4% p.a. after tax) and the effective post tax cost of you Home Loan is 10% (about 15% before tax) then this is a good idea. However, if you expect to make over 20% p.a. (about 13.5% post tax) by investing in shares or in a business, then you must borrow as much as you can on the Home Loan and not withdraw money from your other investments. 

Another important consideration is your tax bracket and the extent of using available tax breaks. The tax breaks are directly related to the level of interest and principal repayments made each year, with an over all upper limit. You may not qualify for the full tax break if your loan is relatively small. Also remember that the government is keen to give more concessions to the housing sector and the overall cap on tax breaks will go up in the future. It is prudent to lock into a large loan today rather than a smaller one. 
 

If you have identified other profitable avenues of savings that are expected to give you 15-20% returns p.a, you can use the Home Loan as a way of getting a cheap loan. In this case borrow up to the limit of 80-85% of the property value rather than withdraw cash from the other savings to make the down payment on the loan. 

What is the tenure of the loan? 

Loans are usually for a maximum period of 15 years (which may go upto 20 years in some cases). Longer tenure loans have smaller monthly installments. You can still get a large loan on a relatively small monthly salary by choosing to take a longer period loan. However, longer period loans maybe more expensive (higher rate of interest) even though the monthly installment payment is lower. Convenience always comes at a cost! …………AbodesIndia.com will try to lower costs. 

Statistical evidence also shows that most people take a longer tenure loan of 10-15 years but end up prepaying the same in 5-6 years. This happens because salaries invariably improve with time. There are two costs that could have been avoided through better planing. The first is the Prepayment penalty of 1-2 % and the second is the higher interest rates quoted on longer tenure loan (especially over 20 years). 

In this example, both costs could have been avoided by taking just a 5-6 year loan. 

Further, if you intend to sell the home after about 5-10 years, take a 5-10 year loan only. There is no point paying a higher interest rate for a longer tenure loan of 15-20 years, if you intend to PREPAY the loan in 5-10 years. 

How will interest rates move? 

Till recently you did not have to make this decision as all loans were given on a FIXED RATE basis. This means that the interest rate is fixed for the full tenure of the loan and so is your monthly repayment amount. Life was simple. You could easily plan for the future as your cash flows each monthly after the loan repayments were very predictable. 

However, interest rates in the economy, changes depending on the demand and supply of money. When industry is booming and everyone needs money to do business, interest rates move up and vice –versa. Home loan customers became unhappy about having to pay a very high interest rate that they were locked into, when rates subsequently fell. 

For the customer’s convenience, FLOATING RATE loans were recently introduced. The interest rate on these loans changed every time the interest rate in the financial system changed. The monthly installment falls if interest rate in the economy falls ( HSBC home loan product) . With other companies the monthly installment amount was kept fixed but the tenure of the loan reduces if interest rates in the economy falls ( e.g HDFC floating rate loans). Normally, floating interest rates are quoted in the form of "PLR plus premium". The PLR (Prime Lending Rate) varies from company to company and changes as frequently as once in 3 months. 

Example…… 

A floating rate quote of PLR+0.5% means that interest rate on the loan will change from 14.5% to 15.5% if PLR goes up from 14% to 15%. Also a PLR +0.5% quote from one bank is very different from a PLR +0.5% quote from another as the PLR levels for each may differ. 

In a floating rate loan, the customer gains if interest rates fall, but will take a severe beating if interest rates rise. 

In order to reduce this disadvantage of a the floating rate loan some progressive banks like HSBC have introduced a HYBRID LOAN. In this case a person can decide to fix the interest rate on his loan for periods of 1,2 or 3 years on a long tenure loan and subsequently decide to float his loan. 

For example….. 

You can take a 15 year loan specifying that you will have a fixed interest rate for the first 3 years, after which you have the option to convert to a floating rate loan. If you think that interest rates are about to fall them you will opt for a floating rate loan after 3 years. If interest rates were to rise during the 3 year period you are fully protected as you had locked in a rate for 3 years. 

You will want to stay on with a Floating rate loan as long as you feel that interest rates are expected to fall further. The moment you expect interest rates to start rising, switch immediately to a fixed rate loan. As these changes never happen overnight, you will have enough time to make the move …..provided you watch interest rates carefully. 

This additional flexibility can be capitalised to substantially lower the cost of the loan, often saving as much as 50% of the total interest you may have paid on a simple Fixed rate loan. But……there is a cost ……..the trouble of tracking interest rates and taking a forward looking view on interest rates……. 

Is there any prepayment penalties? 

Each monthly installment consists of a portion that goes towards repaying the original loan principal and the balance going towards interest on the outstanding loan. If you pay anything over the amount that would go towards principal repayment, the excess amount is construed to be a loan prepayment. Most Housing Finance companies charge a fee of 1-2% on the amount being prepaid. This can be a big disadvantage in several cases. 

  1. Your earning capacity will normally increase with age and a prepayment fee deters you from completely retiring your debt before time.
  2. Your ability to refinance the loan if interest rates subsequently fall gets constrained
  3. You may want to sell the home during the tenure of the loan and you find prepayment costs are an unnecessary burden.
If you may need to do any of the above, choose a loan with no prepayment fees. 

The Total Effective Interest Rate (TEIR) vrs the EMI comparisons: 

It is very important for you to understand the total cost of the loan and try to minimise this cost to the extent possible. As home loans are of a long duration even a 0.5% difference in interest rates can cost you a lot of money over time. 

For example……… 

If you had taken a taken a 15 year loan of Rs. 5 lacs at 15% p.a you would have paid Rs. 31000 less than a 15 year loan of Rs 5 lacs for 15.5%. 

Most of us compare the cost of the loan by comparing the EMI’s (Equated Monthly Installments). This can be misleading as you are ignoring the "time value of money" which means that you need to look at when the EMI is being paid. This is because the value of One Rupee today is vastly different from the value of a Rupee 10 years ago. Using a Discounted Cashflow Model that calculates the Effective interest cost depending on when the EMI amounts are being paid solves this problem. 

Other costs that go into the same Discounted Cashflow Model include: 

  1. Annual rest, monthly rest, daily rest method of quoting interest rates. The annual rest method of quoting interest rates gives the borrower the credit of principal repaid only once a year although he is paying a portion of the principal in each monthly installment (EMI). A loan quoted with an annual rest interest rate is much more expensive than one quoted on a monthly /daily rest method although the 2 numbers may look identical on paper. 
  2. Processing and administrative fees that have to be paid at the time the loan is disbursed.
  3. Tax benefits that reduce the total annual repayment.
Documents for home loans

A house is probably the biggest, the most expensive and the most exciting purchase, that any individual makes. However, the entire process of buying a house is a tedious journey. It commences with the search for the right property taking into consideration size requirements, neighborhood , building aesthetics, amenities and your financial constraints. After property inspection and price negotiation , the very crucial next step is reviewing the numerous types of home loans and selecting the right lender. Your loan approval will be a smooth affair with no major hiccups, if all the required documents are in place.

Most HFCs require borrowers to be in the age group of 21 to 60 and have a stable income. Loans can be availed by both residents as well as NRIs. However, it is essential that the NRI applicants have a local co-applicant or a local Power of Attorney holder. Loan applicants can be categorized as the general salaried individuals, self-employed individuals, NRIs, partnerships and private limited companies. Documents required for purchase of a flat vary slightly from documents required for construction of an individual house on a plot. So apart from applicant's individual status, documents required vary with the type of loan applied for.

Let us first consider the documents that are common to almost everyone. Duly filled in home loan application form, proof of identity (Passport, photo PAN card, driving license, Voter ID card or defense ID card), proof of residence (Passport, driving license, ration card, telephone bill, electricity bill, Life insurance policy or voter ID card) and proof of age (school leaving certificate, birth certificate, driver's license or voter ID card) are a must. These documents must be supported by papers that talk of your financial status.

Salaried individuals must submit latest salary slip showing statutory deductions and Form 16. This is a declaration from the employer giving the details of income and deductions, duly signed by an authorized signatory of the company. Otherwise salaried individuals can also submit latest acknowledged IT returns and bank statements for the last 3 months.
Supporting financial documents for a self-employed individual must include computation of income for the last 2 years certified by a chartered accountant. Otherwise submit P&L and Balance Sheet for the last 2 years certified by a chartered accountant , copies of acknowledged IT Returns for the last 2 years and bank statements for the last 6 months.

If you purchase a flat from a builder, the builder in most cases takes care of organizing a loan and providing necessary documents from his end. Do not forget to include original copy of your agreement with the builder, copy of building plans sanctioned by the competent authority, commencement certificate granted by Corporation and latest tax receipts.
NRIs must provide necessary supporting to support their claims of employment, and residency along with property details. A copy of employment contract, latest work permit, details of previous employment, Identity card issued by current employer , latest salary slip/certificate , and four months Overseas Bank Account Statement and pages with visa stamp on the passport.

NRIs must also submit property related papers that includes allotment letter from the association of apartment owners, receipts for payments made for purchase of the dwelling unit, agreement for sale and a copy of approved drawings of proposed construction. There may be a slight variation in the documents that need to be submitted from lender to lender. However, these documents are to essentially check your claims of financial stability, residency status and property details.

Some new schemes

 

  • Axis Bank : Offers Free Property and Personal Accident Insurance with Home loan
  • Bank of Baroda : Offers No processing fees for Home Loan and Take over
  • HDFC : Offers a Choice to choose your loan as Partly Fixed or Partly Floating.
  • ICICI : Offers Free Personal Accident Insurance with Home loan
  • Kotak Bank : Offers Free Personal Accident cover with Home Loan.
  • SBI : Provision to finance cost of furnishing and Consumer durables as  part of project cost
  • Standard chartered Bank :  NO Guarantors required for taking a Home Loan
  • Budget - Impact on Home Loans

    The current Budget has extended the same tax benefits for one more year.

    You can save significant part of your tax liability if you have taken a home loan. Here's how it works:

    Interest paid on the home loan
    As per Sec 24(b) of the Income Tax Act, 1961 a deduction up to Rs. 150,000 towards the total interest payable on the home loan towards purchase / construction of house property can be claimed while computing the income from house property. (The deduction stands reduced to Rs 30,000 in case of loans taken prior to March 1, 1999). The interest payable for the pre-acquisition or pre-construction period would be deductible in five equal annual installments commencing from the year in which the house has been acquired or constructed.

    Please remember that in case of self occupied property, this deduction is allowed only for one such self - occupied property. The interest towards home loan taken for purchase, construction, repairs, renewal or reconstruction of house property is eligible for deduction under section 24(b).

    Principal repayment of the home loan
    As per the newly introduced Sections 80C read with section 80CCE of the Income Tax Act, 1961 the principal repayment up to Rs. 100,000 on your home loan will be allowed as a deduction from the gross total income subject to fulfillment of prescribed conditions. Let us consider a hypothetical example.

    Your taxable Income: Rs 5,50,000

    Principal repayment for the same year: Rs 1,10,000 and Interest payable for the year : Rs 1,60,000

    Total Deductions allowed: Rs 2,50,000 (Rs 1,50,000 towards interest payable & Rs 1,00,000 for principal repayment of the loan)

    Thus, your taxable income will reduce to Rs 3,00,000 ( Rs 5,50,000 - Rs 2,50,000 ).

    Use the Tax Savings Tool (on the left) to ascertain the proper tenure of the loan you must take to minimise your post tax cost of the loan. If you have already taken a loan, it could be useful to refinance the same today at a lower interest rate and a higher tenure using the Refinance Tool.

  •  

    • The issue of Stamp Duty on Registered Mortgage Deed

       

      Normally the lenders will ask you to create a registered mortgage deed on the property which they will retain with them as a security against your loan. As this is a legal document, the prevalent stamp duty needs to be paid to the State Govt. In the state of Maharastra, this duty is about Rs. 5000 for a loan below Rs 5 lacs and about Rs. 35000 for a loan above Rs 20 lacs. Some lenders like HDFC do not ask for the Registered Mortgage Deed but only take the original Title Papers of the property as a security. Thus customers of HDFC do not pay the stamp duty to the respective State Governments.

      Some States have taken this matter to court as they are losing revenue. Some of the lower courts have ruled in favour of the State Governments and asked HDFC to make good the Stamp Duty for all past customers along with interest. The matter is now pending with the Supreme Court. We feel that the ruling will again go in favour of the States. We are not sure if HDFC would be asked to pay up a large amount along with interest, which may ultimately be passed on the the existing customers. Any new customers going to such lenders must be aware of the risk of a legal ruling that may result in a future cash payment along with interest.

    • Flexible Loan Repayments

      If you are a salaried employee, banks look at your current salaries while deciding how much they can lend you. The fact is that your salary can only increase as time goes by and your ability to repay larger loan amounts will only get better. Some banks now offer a flexible repayment plan that allows you to pay larger portions of the loan in the later years. Your initial monthly payments are kept low. IDBI Bank, HSBC and Citibank offer Flexi repayment option loans. To read more about this click below.

       

     
    Special features of product offerings:

     

    • Standard Chartered Bank - Home Saver Account . Along with the Home Loan, your will get a FREE current bank account into which you may deposit your monthly salary. The EMI for the loan will be automatically reduced from your account. The excess balance in your savings account will be saved interest that will be adjusted against your future EMI payments. The bank claims that the effective interest rate gets reduced by upto 45% because of this scheme.

       

      One can deposit and withdraw your money (salary and other income) whenever you need, without any charges

      Interest is calculated on daily balance and applied monthly

     

    • Citi Bank offer loans with no guarantors. Most banks require that you present a guarantor who will back you up if you default on your loan repayment. It can often be embarrassing to ask friends to stand guarantor as most banks do not accept relatives as guarantors.

       

      Citibank gives home loans upto 90% of the property value, the highest from any bank ( only IDBI Home Finance Ltd. matched this offer)

      Citibank offers a flexi-savings account to reduce your cost of borrowing. The bank will automatically open a Saving Account from which you can give standing instructions to deduct the EMI payments for the loan. You can then prepay the loan at any point in time and be given instant credit for the same, in case you get a large lump-sum annual bonus from your employer. Should you require money in an emergency at any point you can avail of a over draft on this savings account at an interest rate that is the same as that on your Home loan. This works out much cheaper than taking an over draft on a normal savings account

     

    • Dewan Housing Finance and LIC Housing Finance Ltd. offers consumer loans to their existing Home Loan customers at a discount to market rates. The customer has to be a housing loan borrower for the period not less than 6 month with a good repayment record

       

      FREE TRIPLE  PROTECTION PLAN in the form of  Loss job of customer, Personal accident life cover and Property cover against natural calamities

     

    • Axis Bank  gives free property and personal accident insurance cover along with the loan. It offers:
          Attractive Interest rates
          Balance transfer facility is available
          Door step service
          Option to choose between Fixed and Floating rate of interest

       

     

    • HDFC (Housing Development and Finance Corporation) offer Flexible (Customised) Repayment Schemes, keeping in mind the fact that each individual has a unique problem requiring unique solutions, HDFC has developed various repayment options like Step Up Repayment Facility, Flexible Loan Instalment plan , Balloon Payment Scheme and Acceleration of EMI.

       

      Pari Passu/ Second Mortgage Arrangements: HDFC has a tie-up with a large number of Public Sector Organizations and banks which enables us to offer loans to your employees with the flexibility of their spouse also availing a loan from his/her own employer

      Safe Document Storage Facilities: HDFC has state of art storage facilities, which are theft and fire proof, at various locations where loan and property documents are stored. In this way valuable documents are stored safely over the period of the loan and are released almost immediately after a customer repays his loan

      A customer, after availing of a loan can approach HDFC anytime thereafter to increase the Equated Monthly Instalment which will help him repay the loan faster.

      Home Conversion Loan offered to its existing customers who are interested in moving to a new house. Through this scheme customers can apply to have their existing loan transferred towards the purchase of the new home. Customers may also apply for an additional loan amount for the purchase of the new house. This gives the customer the option of selling their existing house, if they wish to, without having to repay their old loan

      The fixed rate loan can be converted to floating without any penalty charges. However, you will be charged 2% if you refinance the loan from another company

     

    • Hudco will waive the last 2 EMI payments on the loan if the customer has a perfect repayment record with no bounced cheques. The loan amount initially taken must exceed Rs. 5 lacs and no prepayments where to have been made during the tenure of the loan. This is not available for the Floating rate loan.

       

      There is a discounted start-up fee for Government employees. The Administrating fees stand reduced from 0.7% to 0.5% only.

      Free triple insurance - property cover, earthquake cover and personal accident cover. given free along with the loan ( not available for the Floating rate loan)

      You can prepay the entire loan in any year without any prepayment penalty. Each prepayment has to be atleast 10% of the outstanding loan. Howvere, the floating rate loan has a 1% prepayment penalty.

     

    • HSBC offers Smart Home, a Home loan PLUS a Saving Account, which enables you to save interest on loan as well as reduce the tenor of the home loan. One can deposit money and withdraw the same from the account anytime at no cost. The account can be used to deposit extra savings which results in savings on  interest payments due on Home Loan. It is because the principal on which loan interest is calculated, is the principal outstanding minus the savings one has deposited in the accout every month over and above the EMI.

       

     

    • ICICI launches a 25 year tenure home loan, the longest available tenour in the market today
      ICICI also launches a variable rate loan with a monthly rest basis versus the regular fixed rate loan that is on an annual rest basis

      No guarantors are required for loans upto 20 years in most cases

      No pre payment fees for any part payment as long as the loan is not fully retired, else 2% charge on pre paid amount. You can repay upto 33% of the outstanding loan in any year without paying penalty.

      Free personal accident insurance

      Sanction approval without having selected a property

      Special 100% funding for select properties

      Higher eligibility for self-employed professionals through segment-specific schemes

  • Kotak Bank offers flexi home loans / FD linked home loan
    Flexi Home Loans :
    You get protection against interest rate volatility during a 3 year period and also the benefit of any rate decrease at the end of each 3 year period. So you get the certainty of a fixed interest rate, along with the flexibility of a floating rate. The interest remains unchanged for 3 years, at the end of which it is reset at prevailing index rate and gets fixed for the next 3 years. This cycle continues till the end of the loan tenure. The impact of any change in the index rate is given after the three year period.It also provides the opportunity of lower interest rate compared to conventional fixed rate loans.

     

    FD linked home loans : A unique offering, where the FD linked home loan is linked to the Bank 1 year Retail Fixed Deposit Rate instead of the Retail Prime Lending Rate(RPLR). So, here the home loan interest rate changes only if the linked Fixed Deposit rate changes. To avail this facility you don't need to maintain a Fixed Deposit with the bank to avail  this facility.This home loan option is available with the Flexi home loan as well as with the conventional floating rate home loan.

    Kotak bank offers :
    • Attractive interest rates
    • Free Personal Accident insurance
    • Simple documentation with speedy processing
  •  

    • LIC Hsg Finance Ltd. will lower quoted interest rate by 0.5% for loans covered by a life insurance cover that is taken from LIC. The life cover must be taken for a minimum period that covers the tenure of the Home Loan

       

     

    • IDBI Home Finance Ltd. offers Home Loans upto 90% of the value of the property and 100% in some new projects. Prepayment penalty of 0% for upto 4 prepayments in each year. The entire loan can be retired without incurring any penalty.Free accident and property insurance.

       

     

    • IDBI Bank (Industrial Development Bank of India Limited) offers special schemes.
          Flexibility of choosing between Floating or Fixed interest rate 
          EMI on monthly reducing balance
          Personalised doorstep service
          Simple documentation 
          Legal and technical assistance
          Balance transfer facility
          Reassessment and adjustment of applicant's loan eligibility in case of change of income and residence status.

      Special Home Loan with a Life Insurance ::
       
      You can avail of a special insurance cover on your IDBI home loan for a small premium. For most of us, buying a house is an important milestone in our lives. IDBI Bank, understand your concerns. Home Loans are now accompanied by a specially-designed insurance cover. So even if calamity strikes, your family needn't worry about the loan.

     

    Glossary of terms ......Home loans


    Equal Monthly Installment (EMI) :

    Loan repayments are usually in Equal Monthly Installments over the tenure of the loan. Some banks also offer a Variable Installment Scheme were in repayments are higher in the beginning of the loan period. This is beneficial for those individuals who are trying to maximise their tax breaks in the initial years and expect future tax breaks to fall (we believe that the opposite is more likely!)

    Fixed /Floating rate:

    Under a floating rate loan, the interest rate on the loan varies from time to time depending on the Prime Lending Rate fixed by the Reserve Bank. This change can happen as frequently as one in six months. If the PLR falls, you benefit as the effective interest rate on your remaining loan falls. However, your payments every month stay the same. The Finance Company will refund some of your EMI cheques and effectively compensates you by reducing the tenure of the loan. The reverse happens if the PLR rises, much to your disadvantage.

    Choosing between fixed and floating loans:

    In the last 2-3 years the PLR has fallen as the Indian economy had slowed down and demand for money was low. If you expect this trend to continue, you stand to benefit from a floating rate loan. If interest rates begin to rise again, you can prepay your floating rate loan and lock in to fixed rate loan. You must them choose a floating rate loan with no repayment charges (one is offered by HSBC). However, if you do not want to speculate on interest rates and need a stable loan to help planning the future, then go for a Fixed rate loan.

    Rest:

    Interest rates are quotes on a daily rest, monthly rest or annual rest basis. The annual rest quote implies that the company gives you the credit for the monthly principal repayments only at the end of each year. Such loans are therefore more expensive than a monthly /daily rest loan. The shorter the tenure of the loan, the greater the effective interest rate difference will be. AbodesIndia.com has standardised all interest rate quotes from companies on a MONTHLY REST basis ( rates will therefore look different from Company brochure quotes which maybe on a annual rest basis)

    Processing Fee:

    A one time fee which is normally non-refundable and payable along with your initial loan application. Rates can vary from 1-2% of the loan amount.

    Administrative Fee:

    A one time fee which is normally non-refundable and payable before your loan is disbused. Rates can vary from 1-2% of the loan amount.

    Commitment fees:

    This interest is charged if you do not draw the sanctioned loan within a period of 6-9 months. The rate of interest is usually about 1-2% a months.

    Interest Tax:

    Housing Finance companies have to pay a tax on the interest income they receive from you. They sometimes pass this on to the customer. Always check with the company if the interest rate they are quoting includes interest tax or not. This tax normally about 2% of the interest rate charged. E.g if the interet rate quoted is 14% then the actual interest rate including interest tax is about 14.28%. AbodesIndia.com has standardised all rates AFTER Interest Tax, on a monthly rest basis to aid comparison across companies.This rate is called the Effective rate.

    Prepayment charge:

    Most Housing Finance companies charge a fee for prepaying your loan before its full tenure is over. This helps them plan their finances, at your expense. Your earning capacity will normally increase with age and a prepayment fee can be a big cost. This fee also limits your ability to refinance the loan if interest rates fall after a few years. The fee is normally in the range of 1-2% of the prepaid amount.

    Refinance Charge:

    Some Housing Finance companies do not charge you for prepayments from your own savings. However, if you retire a loan using money borrowed from another Finance Company, you will have to pay a Refinance charge of 1-2% of the loan outstanding.

    Down payment:

    Housing finance companies would normally give a loan up to 80-85% of the value of the property. The remaining amount would have to paid by the buyer (to the seller), as a down payment before the he draws on the loan.

    Tenure of the loan

    Normally, loans are given for a period of 1-15 years. Some companies also give loans upto 20 years at an additional interest cost of 0.25% -0.5%. Most companies do not allow loans for a fraction of a year.

    Valuation of properties offered as collateral securities to the banks

    ROLE OF PANEL VALUER

    Posted on 12th Jan 1999
     

    While granting the finance to the applicant, depending upon the necessity, the Bank insist them to create collateral securities by the way of equitable mortgage.

    According to the Transfer of Property Act (section53).

    ‘A mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced / or to be advanced by the way of loan, an existing or future debt of the performance of an engagement which may give rise to a pecuniary liability’.


     

    Finance is advanced by the Banks by depositing the Title Deeds of the property as security. Acceptance of the deed as security depends upon the legal opinion given by the Panel Advocate. On the basis of legal opinion and scrutinising the basic documents like Title Deed, Tax Receipts etc. Bank sanctions loan to the clients. Nobody does the site inspection. The physical inspection is very much required as there are occasions that the documents created for mortgage have no connection with the actual property of which collateral security have been obtained.


     

    Panel Valuer is the only person who is physically inspecting the property under mortgage and depending upon the site conditions, prepares his valuations reports and issues the valuation certificate. When a property is valued for the purpose of creating Equitable mortgage to the Banks, the responsibility of the Panel Valuer is much more and he takes extra care. He observes many vital factors like complications in documents, involvement of others’ right in the property possible litigation, encroachments, right of ownership etc. Apart from involving mere technical knowledge, he applies his intelligence, shrewdness and analyses practical and critical site conditions. For this, he goes through the following stages and prepares his final Valuation report.

    1. Perusal of Documents

    2. Physical Inspection

    3. Assessment of Value


     

    1. Perusal of Documents

    The following documents are perused before going for the site inspection.

    1. Title Deed – Name of the owner, The date and Registration No. of the Title Deed, Survey No., Ward No. Village Name, etc. The size and extent of the site, Any percentage of shares value is involved. Any common share (with the neighbours) is involved, Any easement right is mentioned. Age of the building if mentioned.

    2. Approved Drawings if available : The year of approval. The owner’s name, Survey No., Ward No., Block No., Village Name etc.

    3. Tax receipt :- name of the owner, tax amount ,Tax Assessment No. Door No. Street No., etc.


     

    1. PHYSICAL INSPECTION

    Since no property is sticked with the label bearing Survey No., Owners Name etc., physical inspection is of utmost importance as far the Realistic Market Value is concerned. Panel Valuer is the only competent person to check the property physically and certify, whether the property offered for inspection is the same described in the Title Deed which is being pledged to the Bank.

    During his site inspection Panel Valuer observes the following :-


     

    In Case of Buildings


     

    1. Assessment of Value

    The Panel Valuer assesses the prevailing Market Value of land after analysing various factors like location, size, shape, demand etc. He analyses the factors favoring extra value and the affecting factors for negative values, assessing the depreciated value of extra items, the depreciated value of amenities, miscellaneous structures etc. Before finalising the value Panel Valuers ensures that the provisions in the various local laws do not affect the value of the land / structures.

    Some Banks follow the procedure of sanctioning the loan first and ask later for the valuation Certificate from its Panel Valuer.

    In one case, when an applicant seeks the sanction of additional loan, he said he will give a vacant site of sufficient extent worth of one crore. The manager of the Bank inspected the property, went to the Registrar’s Office, enquired about the Guideline Value, got himself satisfied about the worthiness for one crore, and forwarded the proposal. The central office sanctioned the loan. Before signing the papers, the Bank requested the Applicant to get a Valuation. Certificate from the Panel Valuer. The Valuer certified the Market Value as 50 Lakhs because in that place the Market Value was less than the Guide line Value. To avoid such type of consequences and complications some basic suggestions for Banks are given below.

    1. The Banks must have their own Panel Valuers to safeguard their interest in this regard.

    2. The Panel Valuers may be permitted to peruse the documents which are in the custody of the Bank. Perusing the documents is the P/Valuer’s duty if undisputed value is required.

    3. When the clients are directed to the P/Valuers the Bank may request him to carry out the valuation on their behalf. This procedures will avoid many problems.

    4. Be cautious while accepting the Title Deeds involving undivided share of land alone.

    5. Verify whether property under valuation involved more than one Title Document.

    6. The Bank Officer in charge must have knowledge in the Field measurements like Guntha, Acre, Areas, Hectare, Sq.metres, Sq.feet, Sq.Yards etc.

    7. Only the prevailing Market Rate is to be adopted and not the Guideline Rates.

    8. Before considering the initial proposals, kindly do not insist the P/Valuer to certify the value assumed at the time of the proposals.

    9. The Panel Valuer can be mutually consulted and his expert opinion may be sought in case of any complications.

    10. Asking the applicants to obtain the valuation certificate form the Revenue officials is not considered as the right procedure. The Revenue people are the authority to identify the property correctly or to certify the Survey No. etc.

    Finally, remember the basic principle of valuation - value varies with the purpose. Value is a function of date purpose and place. Hence each valuation is a typical one and depending upon the merits of the individual case the Panel Valuer applies his mind, analyses the Pros & Cons and do the authentic, accurate, unbiased, undisputed and unquestionable Valuation to safeguard the interest of the Bank.

    ____________________________________________________________

     

    Details about STATE BANK OF INDIA Home Loans


    "THE MOST PREFERRED HOME LOAN PROVIDER
    "
    voted in AWAAZ Consumer Awards along with the MOST PREFERRED BANK AWARD in a survey conducted by TV 18 in association with AC Nielsen-ORG Marg in 21 cities across India. 

    SBI HOME LOANS now offers Interest Rates concessions on GREEN HOMES in accordance with SBI's commitment to Environment protection.

    SBI Home Loans come to you on the solid foundation of trust and transparency built in the tradition of State Bank of India.

    Best Practices followed in SBI mentioned below will tell you why it makes sense to do business with
    State Bank of India

     

     Best practices followed in SBI

    People dealing with you End to End service by Permanent employees of SBI who are accountable to you.
     Place SBI branch of your choice will service your loan account. You can always meet our employees face to face.
     Price  Complete transparency.
    Interest charged on the daily reducing balance.
    Prepayment charges No penalty for prepayments made, out of bonafide savings or windfall gains for which evidence is produced.
    Costs hidden in fine print  No hidden costs
     Transparency  Complete transparency. All the features of our product, including interest rates, are in the public domain.


    Unique features:

    * Provision for on the spot "In principle" approval.

    * Loan sanctioned within 6 days of submission of  required documents.

    * Option to avail Home Loan as a Term Loan or as an Overdraft facility to save on interest and maximise gains (see SBI MaxGain in the following sections)

    *Option to club income of your spouse and children to compute eligible loan amount

    *Provision to club depreciation, expected rent accruals from property proposed to compute eligible loan amount

    *Provision to finance cost of furnishing and consumer durables as part of project cost

    *Repayment permitted upto 70 years of age

    *Free personal accident insurance cover upto Rs.40 Lac.

    *Optional Group Insurance from SBI Life at concessional premium (Upfront premium financed as part of project cost)

    *Interest calculated on daily reducing balance basis, and starts from the date of disbursement.

    ‘Plus’ schemes which offer attractive packages with concessional interest rates to Govt. Employees, Teachers, Employees in Public Sector Oil Companies.

    *Special scheme to grant loans to finance Earnest Money Deposits to be paid to Urban Development Authority/ Housing Board, etc. in respect of allotment of sites/ house/ flat


    *Option to avail loan at the place of employment or at the place of construction

    _______________________________________________________________________________________________________________

    XIV. Tips on Leasing Property

    Leasing out a domestic property involves a number of legal procedures and financial arrangements. You can look for a tenant on your own or appoint a licensed estate agent to handle the leasing of your property. In either case, you are required to provide accurate property information to your potential tenant before entering into a lease. If you choose to engage an Agent, you should clarify with him or her details of the engagement such as the amount of commission and the time of payment.

    Before entering into a lease agreement, the lessee should ensure/ verify:

    1. that the lessor has proper title of the property.

    2. the society share certificates are authentic in order to ensure that the lessor has the title to the property.

    3. the lessor is either the owner of the property or an authorised power of attorney holder. The agreement should be signed by the lessor himself or his duly authorised Power of Attorney.

    You need to be aware of your rights and responsibilities as a landlord and pay attention to the following points to ensure a smooth leasing experience. Here are useful tips on leasing of property for the landlord/lessor:

    • Get a broker or a lawyer to review the lease of any obligation or duty and to delve more deeply into the business points of the lease.

    • Make sure that any lease you consummate will produce the intended result, in an enduring manner, beyond when the property is to be mortgaged or sold.

    • The Lease Agreement should meet the needs of both tenant and landlord. The lease should be thoughtfully drafted and can severely impact your return on investment.

    • Structure the terms of a renewal sensibly keeping in mind the tenant's negotiating posture.

    • Keep a copy of the lease agreement as the tenant may request a copy of it in their first Request for Proposal.

    • Keep the property furnished and ensure good condition of the furnishings. The potential lessee might want to inspect it. Also issues like sufficient infrastructure (i.e. access roads, power, water supply, shopping areas, hospitals, bus stations, recreational facilities, etc.) have an important bearing on the value of the property. If there is any leakage, the lessor should ensure that it is rectified.

    • If improvements are required in electrification, it should be listed and immediately attended to. The lease negotiation process must be made as simple and efficient as possible for both the parties. Delays over minor details will lessen the interest.

    • Almost all commercial lease deals with the possibility of casualty damage. The tenant should be able to understand whether the premises can be used within a reasonable period after the damage, or calls for alternative leasing arrangements. He/she would also want to know whether they will be required to spend additional funds to return to normal business operations.

    Tips for the tenant/lessor

    • You must be sure about how long you will stay. For those planning on a commercial lease, you need to have the far-sightedness to know how long your business can operate effectively in the space you plan to lease. It can be one of your most important decisions on the firm.

    • You must be aware of the serious legal implications of breaking a lease. You could lose your security deposit, be denied access to the space or a suit could be instituted. You must make sure that you are committed to the length of the lease and the location before you sign.

    • You can make the landlord see how renewal clauses are a good way to keep tenants without having to renegotiate their leases after the original term expires.

    • Since you are ultimately responsible for meeting the terms of the lease, you must ensure that the terms and conditions are not lopsided. Make sure that it is free from any clauses or conditions that may unfairly affect your rent, restrict your use of the space, or result in an unexpected lease termination.

    • See to it that no unreasonable disclaimers about the building or services are made.

    • You may seek the assistance of your broker, and ask the landlord some crucial questions to make sure it is the best property for your business or accommodation needs.

    Rights of the Lessee:

    A lessee has certain rights under the property laws of the land. As laid down by the Transfer of Property Act, 1882, the rights enjoyed by a lessee are as follows:

    1. Accession rights over the leased property subject to fulfillment of all other clauses. The lessee cannot be deprived of accession rights if he pays the rent in full and conforms to the laid down terms of the agreement.

    2. Full rights to repair and maintenance of premises by the lessor. In case he is deprived of that, the lessee can carry out the repairs himself and deduct the charges from the payable rent. He can also approach legal services if deprived of re-imbursement.

    3. Re-imbursement of payment towards dues/taxes otherwise payable by lessor or against the property.

    4. Lessee may remove things attached by him to the property during his possession provided the property is left in the same stage it was in when he had taken possession.

    5. Full rights on the 'produce' of his efforts on the property during his possession even after the lease has expired. This is particularly in the case of plantation where the produce comes at its due time and the lease may have expired by then. But such a condition is permissible only once and till the considerable occurrences present themselves.

    6. Right to sub-lease the property provided there is such a clause in the lease deed. If the property can be sub-leased under law and the lessor or anybody from his side is not allowing the privileged, the lessee can seek legal opinion against the lessor.

    7. Right to use the property and its products wherever applicable, as if it were his own; unless he himself or through his associates, tries to damage, sell or mutilate the property or perform anything that is criminal or conspiring in nature.

    8. Right to privacy of his, his family and his business, if conducted from the premises, from the lessor or any of his representatives. Undue interference and intimidation from a lessor can be reported to law and action taken thereof.

    9. The lessee cannot be evicted from the premises till the determination of the lease or unless he has been served a notice for a period of maximum 30 days to evict, as per laid down terms in the lease deed/agreement. Such a clause of notifying may differ across different purposes and parties.

    The rights as privileged to the lessee if not awarded are liable for legal action against the lessor or the concerned authority. If you are stuck in a dispute with your lessor over your rights or if you want to know about your rights, contact us for the best legal services from our team of lawyers with expertise in property laws and rights of the lessee.

    Rights of the Lessor:

    A lessor enjoys certain privileges under the property laws of the land. As laid down by the Transfer of Property Act, 1882, the rights enjoyed by a lessor are as follows:

    1. Right to timely accrual of lease amount by the lessee as per lease deed. Lessor has the right to approach the lessee or in extreme cases, seek legal services against undue delay or complete non-payment of lease amount. Any such delay if comprehended due to natural causes, the lessee should inform the lessor.
    1. Right to know about the condition his property is in after possession by the lessee. However, care should be taken by him not to infringe on the privacy of the lessee.
    1. Right to know of any changes that the lessee might want to make in the Lease Deed. He should be informed and made a party to any thought or action to change the terms or a term in the lease agreement.
    1. Right to notify the lessee of an intention to increase the rent, keeping in view the changing trends or increase in lessor services. There should be a clause in the Agreement that allows out-of-turn hike in rentals, otherwise as per law, no hike is allowed until the duration of lease expires.
    1. Right to be informed of any disclosures to which the lessee has access to without the knowledge of the lessor. Not doing so intentionally by the lessee makes him liable for judicial action and the lessor can seek legal remedies if he wishes so.
    1. Right to protect his property from willful or circumstantial damage by the lessee. He has the right to be informed of the purpose of entering into a lease by the lessee.
    1. The lessor has the right to get back his property on repossession in the same shape as was before the lessee moved in. He can timely check the property for proper and intended usage by the lessee.
    1. Right to repossess the property complete with all fittings and furnishings as affixed by him. If the lessee causes damage to the fixtures, and it is not due to natural wear and tear, the lessor can claim from him charges for repairing damaged fixtures.
    1. It is further deemed as the duty of a lessee to pay all charges for supplies like electricity, water till the time of possession. The lessor has the right to not pay such dues from his own pocket. Even if the lessee has left after determination (termination) of the lease, he can be summoned legally if the lessor wants to and make him pay the dues.

    To get answers to all of your queries on your rights, their exercise and resolution in dispute, contact us for the best structured legal information and legal services of repute.

     

    _______________________________________________________________________________

    15. Sample Drafts and Forms

    1.Lease Deed

    THIS INDENTURE OF LEASE made at New Delhi this ________day of ___________.

    BETWEEN

    Sh. /Smt. __________________Hus/Wo. _____________________R/o ______________ _____________________(hereinafter referred to as the "Lessor", which expression unless repugnant to the context hereof shall mean and include her heirs administrators, executors and assigns) of the ONE PART.

    AND

    Sh. ____________________S/o Shri_______________________, R/o ______________ _________________Doctors Lane, __________________. (hereinafter referred to as the "Lessee" which expression unless repugnant to the context thereof shall mean and include his heirs, administrators, executors and assigns) of the OTHER PART. WHEREAS the lessor is the absolute owner of the residential property bearing Flat No. _______________________________________________(hereinafter "Residential Property").

    AND WHEREAS the lessee has agreed to take on lease the said Residential Property comprising of two bedrooms, drawing-cum-dining, kitchen, one bathroom, one toilet, one balcony and one scooter garage admeasuring a total built up area of ____________. (Approximately) or its thereabouts (hereinafter all of the aforementioned referred to as "Demised Premises") for the residential purpose of Sh. ______________and his family, such demise being purely temporary and limited to the period of this lease. Accordingly, the Lessor and Lessee (hereinafter collectively referred to as the "Parties") are executing this Lease Deed to reduce the terms and conditions agreed in respect of the Demised Promises in writing.

    NOW THIS DEED WITNESSETH and it is hereby agreed by and between the Parties hereto as follows:

    1. This the lease in respect of the demised premises shall commence w.e.f. __________________and shall be in force initially for a period of one year which may be further extended for a period of one more year with an increase of Rs. ____________ in monthly rent.

    2. That the Lessee shall pay to the Lessor, lease rent of Rs. ____________ per month in advance but before the _________of the month through a cheque drawn in favour of Mrs. _______________.

    3. That the Lessee shall pay to the Lessor a sum of Rs. ____________________ as security deposit free of interest which will be refunded at the time of the premises having been handed back properly to the Lessor with all the fittings and fixture etc. in good condition, all dues having been cleared.

    4. The Lessee shall pay the Electricity & Water according to the concerned authorities/Bills.

    5. It is further agreed to by and between the parties that after the expiry of the Term i.e. ______years, the Lease in respect of the demised premises shall ipso-facto be terminated.

    6. That the Lessee shall not make any structural addition/ alternations, but may install air conditioners or room coolers etc. without damages to the property.

    7. That the Lessee shall not sublet the premises the whole or any part thereof during the period of tenancy nor will allow at the time of vacating the premises and will hand over peacefully vacant possession of the premises to the Lessor or his authorized agent.

    8. That the Lessee will use the premises purely for the residential purposes and shall not use the premises. Nor part of it for any other purpose.

    9. That at the time of occupation, the Lessee shall see that all fittings and fixtures are in perfect order and shall be responsible to restore this in the same condition in which they have been taken over except natural wear and tear.

    10. That the Lessee shall allow the Lessor or his authorized agent to enter the said premises at reasonable hours or when necessary for inspection/ repair etc.

    11. That day to day repairs arising out of the normal wear and tear or resulting from any modifications by the Lessee shall be done by the Lessee at his own cost but any major structural repairs will have to be done by the lessor at his own cost.

    12. That the Lessee or the Lessor has the right to terminate the Lease Deed with written notice of one month of either party.

    13. That the Lessor shall pay all the taxes i.e. house tax, property tax.

    14. That in case of default of non-payment of the Lease amount for the maximum period of _________months, the Lessee has got to vacate the premises immediately. No claim whatsoever will be entertained.

    15. That the Lessee has agreed to abide by the terms and conditions of the Lease Deed. In case of failure to comply with any condition the Lessor shall have option/right to get the premises vacated without any notice.

    16. That any dispute related for the aforesaid house shall be subject to the jurisdiction of the Court at __________ .

    IN WITNESS WHEROF THE parties have set and subscribed their hand in the presence of the witnesses mentioned herein below.

    WITNESSES:

    1.                                                     LESSOR

     

    2.                                                     LESSEE

     

    ___________________________________________________________________________________

    2.General Power of Attorney

    TO ALL TO WHOM THESE PRESENTS SHALL COME, I _______________________, Indian Inhabitant,
    residing at_________ ___________________________________,

    WHEREAS I am going to be out of ___________ for a long time. I wish to appoint fit and proper persons to
    look after my affairs in my absence.

    AND WHEREAS ________________________________(name), know all my affairs and are capable of
    handling the same. I therefore, desire to appoint ______________________________________ to act as
    my Attorney and to look after my affairs.

    AND WHEREAS _____________ has consented to act as my Attorney (hereinafter referred to as the "said Attorney").

    NOW KNOW YE AND THESE PRESENTS WITNESS that I, the abovenamed ______________________,
    do hereby appoint, nominate and constitute _________________and _______________________, residing at
    ___________________________________________________, to be my true and lawful Attorney, jointly or
    severally in my name and on my behalf and to do and execute all or any of the following acts, deeds, things, that
    is to say:-

    KNOWN TO ALL MEN BY THESE PRESENTS THAT I,______________S/o
    Shri_____________________ , presently staying in __________________________ and r/o
    ______________________, is the owner and is in possession of Residential Plot No.
    _____________sq.mtrs. situated at ___________________________________________
    AND WHEREAS due to my personal difficulties in the execution of conveyance deed and other formalities in
    regard to the Residential Plot No._________________________, I hereby unanimously resolve and decide to
    appoint my General Power of Attorney(s), Shri ____________________s/o Shri
    ___________________________________r/o ________________________________ to act on my behalf
    jointly or severally inter alia the following:

    1. To apply and obtain various permissions under the foreign Exchange Regulation Act, 1973 and or any other Central or State Act and to complete all those formalities which may be required for obtaining such permissions.

    2. To communicate, give undertaking to Reserve Bank of India or any other authority prescribed by the law.

    3. To enter into, make, sign and execute and deliver and acknowledge and perform any contract or contract/s, undertaking any other writings required by Reserve Bank of India under Foreign Exchange Regulations Act.

    4. To sign, verify the written statements, objections, memorandum of appeals and applications of all kinds and to file them with any authority including Reserve Bank of India, or the Assistant Director, Joint Director, Additional Director appointed under the Foreign Exchange Regulations Act.

    5. From time to time purchase, take on lease or mortgage or otherwise acquire and hold properties movable or immovable as may be thought necessary or expedient on my behalf.

    6. To pay necessary cost, taxes, out going charges, expenses and dues in respect of the property purchased.

    7. To apply for and obtain no objection certificate under Maharashtra Co-operative Societies Act or from any other body or bodies in respect of agreement of purchase or sale of the property and to do all Acts, Deeds, matters and things necessary for obtaining such certificates, in connection with the property.

    8. To execute transfer instruments, conveyance or other deeds in respect of property purchased or sold.

    9. To deal and correspond with electric supply company for installing meter or for transferring the meter installed in the premises owned by me. For such to sign any document writing affidavit undertaking indemnity as may be required by the concerned authorities.

    10. To collect dividends and duly discharge dividend warrants by issuing valid receipts in respect of the shares/debenture belonging to me and to represent me as and when necessary before such Authority or authorities or companies for the purpose of taking delivery of the shares, dividend warrants and bonus shares that may be issued by any company whose shares are possessed by me and owned by me or may be possessed by me or owned by me in future and to attend as a proxy in company meetings and to give vote or votes.

    11. To open, operate, close, transfer, bank accounts and to sign and/or endorse my name to cheques and other negotiable instruments, drafts, fixed or call or time deposit-receipts and securities or investments of any kinds and transfer forms, dividend warrants, interest coupons, refund orders or other similar instruments.

    12. To receive money due to me and sign receipts, to apply for shares/ debenture/ rights application in public limited companies sign application forms, to dispose them at prices considered proper by the said Attorney, sign transfer deeds or other similar instruments on my behalf.

    13. To invest any of my money in or upon any of the Government securities, Unit Trust, Bonds, promissory notes, shares, debentures, Postal scheme, Mutual Fund, Rural Development Bonds and Bank Deposits, RBI schemes or Corporate bodies, limited companies, firms and institutions or any scheme which may be introduced in future by any of the authorities in my name singly or jointly with others and from time to time to vary the said investments, to deposit in banks or in any public or corporate bodies and withdraw them, renew them for such periods as deemed fit by my Attorney and to draw and to collect, interest and other amounts as and when they become due.

    14. To encash all my investment made by me in my maiden name and for that to sign all applications, forms, undertakings, or any type of writing as may be required by the concerned authority for renewing them or for encashment of them and also to issue valid receipt.

    15. To sell the flat, shop, land/shop plot, garage, parking space, office premises, property/properties purchased by me in my name or jointly with others, to such person(s) on such terms and conditions as my said Attorney may deem fit, and/or relinquish my right, title and interest as the sole owner or in my capacity as beneficiary and to collect/receive sale proceeds/ realization amounts thereof, and to issue receipts for such payments on my behalf.

    16. To make and file returns under the Income-tax Act, 1961, Wealth-tax Act, 1957, the Gift Tax Act, 1958 on my behalf and to represent me before any of the concerned authorities including appellate bodies in such proceedings, and appeals and revisions in such proceedings.

    17. To examine, adjust, negotiate and settle all accounts and reckoning to compound for any debt due or owed by me.

    18. To vote at the meetings of any company or corporate bodies or co-operative Societies or condominium of Apartment owner or any body including meeting called by contractors, Builders, Promoters, Tenants or members or owners of a house or building where I or My Attorney have bought or owned a flat or have other interest or where otherwise act as my proxy as the case may be or representative or appoint proxies in respect of any property, share debenture etc. now held by me or which may hereafter be acquired in my name by the said Attorney.

    19. To pay insurance premium on my life policies or on my properties and have correspondence with the concerned authority on all attendant matters and to sign all forms, claims, settlements etc.

    20. To commence, institute, file, carry on, continue, prosecute, defend, answer or oppose all actions, suits, writ petitions or other legal proceedings and demand and to appear in any court of Justice in any actions or other proceedings which may be instituted by and/or against me and in the said actions or proceedings to prosecute or discontinue or to become nominated therein or suffer judgment to go against me as the Attorney shall be advised and think proper.

    21. To appoint any advocate, solicitor, chartered accountants, pleader or any other legal or income tax practitioners.

    22. To apply for certified copies, inspection of and to inspect the judicial records.

    23. To manage all my properties, movable and immovable, now owned and possessed by me or which I may possess in future, to do all such lawful acts as the said Attorney may consider necessary and expedient for my advantage as the case may be and for the benefit of my estate and in particular to improve them, to lease them, to collect all rents and profits and to take all lawful proceedings and means by suits or any other actions for recovery of and receiving the rents and otherwise for managing these properties of mine.

    24. From time to time purchase, take on lease or mortgage or otherwise acquire and hold properties movable and immovable as may be thought necessary or expedient on my behalf.

    25. To claim, demand, sue for, enforcement of payment of and receive and give effectual receipts and discharges of all moneys, securities for money, debts and legacies which I now possess or to which I am or is entitled or to which I may become entitled or which are or may become due owing or payable or transferable to me from any person or persons.

    26. To sell, convert, collect, get in or manage or collect otherwise administer any property movable or immovable which may be vested in me alone or jointly with any other person and to execute and sign any deeds and generally to do any acts which I could lawfully have executed signed and done in any such capacity.

    27. To sell for consideration any part of my property, to receive the price thereof and to grant receipt for the same and to execute and sign and get registered the transfer deeds, present for registration and to admit execution and to take delivery of any document executed by me or by my Attorney before any Registrar or Sub-Registrar.

    28. To let the property on rent belonging to me on such terms and conditions as the Attorney may think fit and proper and receive the rents from the tenant/s or lessee/s the case may be and issue proper receipts for the amounts so received; to maintain the property and effect necessary repairs from out of the rents so derived, to pay all taxes legally payable in respect of the said property, to represent me before the authorities of Bombay Municipal Corporation, authorities under the Maharashtra Land (Ceiling and Regulation) Act, Land acquisition to the society or obtaining any permission for letting out property and to file any sort of undertaking written statement to give proper effect and other authorities and to file all returns or applications before them, to engage counsels, advocates, auditors, agents or other persons, to discharge any or all of them and to appoint other persons instead necessary for any of the purpose on such remuneration, salary or commission as the said Attorney think proper, to represent me before the said authorities and for that purpose to sign vakalatnamas on my behalf.

    29. To file suits for recovery of arrears of rent or recovery of loans advanced or deposits made, defend suits filed against me pertaining to my properties and other assets and to compromise such suits.

    30. To sign, verify, execute, plaints, written statements, counter claims, petitions, appeals, reviews, applications, affidavits, Power of Attorney and papers of every description that may be necessary to be signed, verified and executed for the purpose of any suit, actions, appeals and proceedings of any kind whatsoever in any Court of Law or Equity, whether of Original, Appellate, Testamentary or Revisional Jurisdiction established by lawful authority or before the Income Tax, Wealth Tax, Gift Tax, Appellate Assistant Commissioner or Tribunals and to do acts and appearances and applications in any such Court or Courts and Forums aforesaid in any suits, actions, appeals or proceedings and all information or complaints that it shall or may be held, brought or commenced and to defend, and answer or oppose the same or suffer judgments or decrees to be had, given, taken or pronounced in any such suits, actions, appeal, proceedings, bills, information or complaints as the Attorney shall be advised or think proper and to execute decree and also to bid at auction sales or to authorise any agents or sub- agents to bid at auction sales and purchase the property at the said auction sales, to make withdrawals or decretal amount or sale proceeds from any Court or authorised agent or sub-agents to do the same.

    31. To appear and act in all Courts, Civil, Revenue or Criminal whether on the original or appellate side or in the registration offices and to represent my interest before any judge, Magistrate, Municipal Corporation, Police, Revenue, Taxation, Port Trust or Customs authorities or any other quasi Government or Public bodies or authorities and to appear before Income-tax, Wealth-tax, Gift-tax or other officer/s, in connection with my affairs on my behalf.

    32. To sell or purchase all or any of the shares and/or securities held by me solely or jointly with others and for that purpose to employ and to pay brokers and other agents in that behalf and to receive and to give receipts for the purchase money payable in respect of such sales and to transfer any of the said shares so sold to the purchaser or purchasers thereof or as he may direct and for these purchases to sign and execute all such contracts, transfer deeds, transfer forms and other writings and do all such acts as may be necessary for effectually transferring the same. .

    33. To transfer any mortgage now made or hereafter to be made in my favour either alone or jointly with others for such consideration as the said Attorney shall think fit.

    34. To sign, seal, execute and deliver, transfer forms, and/or deeds of shares, dividend warrants, interest warrants, receipts etc. as occasion may require

    35. To accept notices or services or writ of Summons or other legal process that may be served upon me and to appear and represent me in any Court of Justice and before Magistrate or Judicial or Quasi-judicial or other officers whatsoever as the said Attorney shall think proper.

    36. To declare and affirm all plaints, Written Statements, applications, Petitions, Execution Application, Affidavits and other necessary documents in my name and on my behalf and to appear before any Judge, Magistrate or other officer empowered by law to hear any suit or proceedings or any other inquiry relating to any of the matters herein mentioned.

    37. To receive all cables, telegrams, registered and unregistered letters and parcels, packages, goods, money orders and other communications and things whatsoever from the Posts and Telegraphs Office or Officer/s or from any other source and to sign and pass receipts for the same and from all carriers by land, sea and air.

    38. To invest any of my moneys or assets at interest or otherwise in the mortgage of any freehold, leasehold or properties of any other tenure or hypothecation or pledge of movable properties as the Attorney may in his absolute discretion think fit and proper.

    39. To execute, to become party to and if necessary to cause to be registered all instruments, deeds, agreements, contracts, receipts and other documents for me and on my behalf.

    40. To insure all my properties for such purposes and sign all applications and in such manner as the Attorney may think proper.

    41. For all or any of the purposes aforesaid to execute all such guarantees, indemnities, covenants and obligations on my behalf as the Attorney may think necessary and proper.

    42. For the purpose of managing my affairs to enter into such arbitration references and to appoint such arbitrators as the Attorney may deem fit and proper.

    43. To cause these presents to be registered in the books of any Company, Corporation or Nationalised bank, RBI whatsoever or in any public or Government Office or in any Court or elsewhere as occasion may require.

    44. To concur in doing any of the acts and things herein before mentioned in conjunction with any other person or persons interested in the premises.

    45. For the better doing, performing and executing of the matters and things aforesaid, I do hereby grant unto my said Attorney full powers and authorities to substitute and appoint in my place one or more Attorney or Attorney to exercise on my behalf as my Attorney or Attorney all the powers and authorities hereby conferred and to revoke any such appointment from time to time and to substitute or appoint any other or others in place of such Attorney or Attorney as the said Attorney shall from time to time think fit.

    AND GENERALLY to do and execute all such deeds, instruments acts and things in relation to the properties movable and immovable now or hereafter belonging to me wherein I shall have any interest and in my capacity and in all matters relating to my affairs as fully and effectively in all aspects as I myself could have done if personally present as the said Attorney shall deem fit and proper.

    I FURTHER CONFIRM that the powers granted by me to the said Attorney are irrevocable and shall not be revoked by me and any person relying upon this Power of Attorney shall be protected by the representation made herein and the authorities given by me to the said Attorney and I shall not challenge or call in question any act done by the said Attorney individually or jointly or severally for me and on behalf of me and the same shall be binding upon me.

    I HEREBY AGREE that all acts deeds and things done by the said Attorney whether jointly or severally shall be construed as acts, deeds and things done by me. I hereby undertake to ratify and confirm all and whatever each of the said Attorney shall do by virtue of the powers hereby given. I hereby confirm that any person relying upon this Power of Attorney shall be protected by the representation made herein and the authorities given by me to the said Attorney and I shall not challenge or call in question any act done by the said Attorney jointly or severally for me and on behalf of me and the same shall be binding upon me.

    IN WITNESS WHEREOF, I ________________________, hereunto set and subscribed my hand and signature at ______ this ____ day of _________, _____.

    SIGNED AND DELIVERED by ) the withinnamed ) _________________________ ) _____________________ in the presence of ................. )

    EXPLAINED AND IDENTIFIED BY ME

    _____________________

    ___________________________ Specimen signature of Attorney ( ____________________ )
    BEFORE ME

    _____________________________________________________________________________________

    3. Gift Deed

    Consideration Value RS.________/-
    Stamp Duty Rs. _______
    Corporation Tax Rs. _______
    Total Rs. _______

    This Gift Deed is executed at New Delhi on this
    _____ day of ________________________, by and between Sh. _______ S/o ______R/o _____hereinafter called the "DONOR",

    AND/IN FAVOUR OF

    Sh. _______ S/o ______R/o _____hereinafter called the "DONEE".

    The expression "Donor" and "Donee" herein used shall mean and include them, their, heirs, successors, legal representatives, administrators, nominees and assignees.


    And Whereas the Donee is the real daughter-in-law of the Donor and out of her love and affection for the Donee, the Donor has agreed to transfer the said share of the said property. i.e. 1/2 (one-half) undivided share in the Entire Freehold Built-up Property bearing No. ____,alongwith 1/2 (one-half) undivided, indivisible and impartible ownership rights in the freehold land underneath measuring 190 square yards, (hereinafter referred to as "THE SAID SHARE OF THE SAID PROPERTY") by way of Gift to the Donee, which has been accepted by the Donee.

    NOW THIS GIFT DEED WITNESSETH AS UNDER:-

    1) That the aforesaid Donor out of natural love and affection for the Donee, of her own free will and without any pressure, undue influence or coercion from any side and without any monetary consideration, doth hereby transfer, convey, assign the said share of the said property with super-structures, alongwith all the freehold rights, title, interest, easements and privileges alongwith sanitary and electrical installations, fixtures and fittings whatsoever appurtenant to the said share of the said property TO HAVE AND TO HOLD the same unto the Donee, absolutely and forever.

    2) That the aforesaid Donor assures the Donee that the said share of the said property hereby gifted is free from all sorts of encumbrances such as prior sale, gift, mortgage, and disputes etc.

    3) That the said share of the said property is already in possession of the Donee and this fact is hereby again confirmed by the Donor, the Donor has delivered proprietary rights and symbolic possession of said share of the said property to the Donee by this Deed.

    4) That the Donee will pay electricity, water, house tax bills or any other dues and demands of the concerned authority in respect of the said share of the said property.

    5) That the Value of the said share of the said property has been assessed by the Valuer at Rs. ________/- the stamp duty has been paid according to law, the value set forth in this Deed is absolutely fair. No monetary transaction has taken place.

    6) That now the Donor admits that she has been left with no right, title, interest or concern of any nature whatsoever in the said share of the said property and the Donee has become the absolute owner of the said share of the said property by this Deed, who shall be fully competent to use and enjoy the said share of the said property or transfer or alienate the same to anyone by way of sale, gift, mortgage, lease or otherwise to anyone in the manner she likes, without any claim, demand and objection by the Donor and her other heirs and successors.

    7) That the Donor will get the said share of the said property transferred, mutated and assessed in the name of the Donee in the Records of MCD, BSES Rajdhani Power Limited, DJB or any other concerned authority, otherwise also the Donee can get her own name so entered on the basis of this Gift Deed or its certified true copy.


    IN WITNESS WHEREOF, the Donor and the Donee have signed this Gift Deed at New Delhi, on the date first mentioned above in the presence of the following witnesses.

    WITNESSES:-

    1. DONOR.

     

    2. DONEE.

    _____________________________________________________________________________________

    4. Agreement for Sale

    THIS AGREEMENT made at ________ (city) on the __ day of ______ (year)

    Between
    ___________________________, of ________(city), Indian Inhabitant, residing at ________________________________, hereinafter called "The Vendor" (which expression shall unless it be repugnant to the context or meaning thereof shall mean and include his heirs, legal representatives , executors and administrators) of the One Part

    And
    ________________________, of ________ (city), Indian Inhabitant, residing at __________________________ hereinafter called "The Purchaser" (which expression shall unless it be repugnant to the context or meaning thereof shall mean and include his heirs, legal representatives, executors, administrators and assigns) of the Other Part;

    WHEREAS the Vendor is the owner of flat No._____, admeasuring about _____ square feet on ___floor of building known as "_________" (hereinafter referred to as "the said Building") (hereinafter referred to as "the said Flat" and which is more particularly described in the schedule to this agreement;) belonging to ______________ Co-operative Housing Society Limited situated and he/she is the member of the ______________ Co-operative Housing Society Limited, registered under Serial No._________ of _____ (hereinafter referred to as "the said Society") and as a member and as the owner of the said flat in the Society he was allotted five fully-paid-up shares of the said Society of the face value of Rs.50/- (Rupees Fifty Only) each bearing distinctive Nos._________ to ____________ (both inclusive) under share certificate No.___ (hereinafter referred to as "the said Shares") ;

    AND WHEREAS the Vendor is now absolutely seized and possessed of and is otherwise well and sufficiently entitled to the said Flat in the said Building of the said Society;

    AND WHEREAS the Vendor herein has agreed to transfer and the Purchaser has agreed to acquire all right, title and interest of the Vendor in the said Flat and the said Shares with all legal consequences including the right of occupation, including his right, title and interest in the said Flat for a total consideration of Rs. ________/- (Rupees ______________________ only);

    AND WHEREAS the Parties hereto have agreed to reduce into writing the Terms and Conditions on which the Vendor has agreed to transfer and the Purchaser has agreed to purchase and acquire the right, title and interest of the Vendor in the said Flat including the entire interest of the Vendor in the said Society;

    NOW IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS:

    1. The Vendor doth hereby agree to transfer unto the Purchaser and the Purchaser doth hereby agree to purchase and acquire all the right, title and interest of the Vendor in the said Society including the said Flat admeasuring about _____ Square Feet of built up area on the ____ floor of the building known as ____________________ belonging to the ___________________ Co-operative Housing Society Limited situated at _________________________, together with the said Shares bearing distinctive Nos.________ to _______ (both inclusive) allotted under share certificate No.______ and all the right of the Vendor as to the use, occupation and enjoyment and ownership of the said Flat together with all rights, title and interest of the Vendor in the said Society for a total consideration of Rs.________/- (Rupees __________________ _______ only) to be paid by the Purchaser to the Vendor in the manner hereinafter mentioned.

    2. The said consideration will be paid by the Purchaser to the Vendor as follows: that is to say: a. Rs. ________/- (Rupees_________________________ only) paid on or before execution of this agreement as Earnest Money (the payment and receipt whereof the Vendor doth hereby admit and acknowledge and acquit, release and discharge the Purchaser from the payment and receipt thereof and every part thereof); and b. the Balance consideration of Rs. ________/- (Rupees ______________________ only) will be paid on or before ____________ and against the delivery of vacant and peaceful possession of the said Flat by the Vendor to the Purchaser.

    3. It is agreed that in the event of any delay or default by the Purchaser in making payment of the balance consideration on the due date, the Vendor shall be entitled to give seven days notice in writing to the Purchaser making time the essence of the contract and if the Purchaser fails to make payment within such notice period, then in that event this Agreement shall be terminated and the Vendor shall be entitled to forfeit the earnest money of Rs.__________/- Rupees __________________________ only) paid by the Purchaser on the execution hereof.

    4. It is agreed between the parties that if there is any delay or default on the part of the Vendor in performing his part of the contract then the Purchaser shall be entitled to specific performance of this Agreement together with right to claim costs, charges and expenses and losses from the Vendor.

    5. The Vendor doth hereby declare and covenant with the Purchaser that the said Flat is free from all encumbrances of any nature whatsoever and that the Vendor has full right, title and interest in the said Flat and has full right and authority to assign and transfer his entire interest in the said Society including the said Flat and the said Shares to the Purchaser.

    6. The Vendor has represented to the Purchaser :
      1. that the Vendor has paid all the dues and outgoings in respect of the said Flat up-to-date.
      2. that the said Flat is free from all encumbrances.
      3. that the said Flat belongs to the Vendor absolutely and that no other person or persons have any right, title or interest whatsoever therein by way of sale, gift, exchange, inheritance, lease, lien or otherwise in the said shares / said flat.
      4. that notwithstanding anything herein contained, any act, deed, matter or thing of whatsoever nature done by the Vendor or any person or persons lawfully or equitably claiming by from, through or in trust for Him, the Vendor has full right, power and absolute authority to sell or transfer to the Purchaser the said Flat and his right, title and interest in the said Society and that the Vendor has not done or committed or omitted to do any act, deed, matter or thing whereby the ownership, possession and/or occupation of the said Flat by the Vendor may be rendered illegal and/or unauthorised for any reason or on any account.
      5. that the Vendor shall obtain the necessary No Objection Certificate from the said Society for transfer, sale of the interest of the Vendor in the said Society, as well as the right, title and interest of the Vendor in the said Flat as herein contained to the Purchaser and also to the admission of the Purchaser to the membership of the said Society in his place and instead of the Vendor when the sale herein is completed by delivering the vacant and peaceful possession of the said flat to the Purchaser.
      6. that on payment of the full purchase price herein reserved, the Purchaser shall be entitled to the vacant and peaceful possession of the said Flat.

    7. The Vendor doth hereby agree to sign and execute any deed or writing as well as all other papers and documents as may be required by the Purchaser for transferring the said Flat and the said shares to the name of the Purchaser in pursuance of this Agreement.

    8. The Purchaser doth hereby covenant with the Vendor that he shall always abide by the Rules, Regulations and By-laws of the said Society and shall pay the municipal taxes and maintenance charges in respect of the said Flat from the day the Vendor delivers possession of the said Flat to the Purchaser. It is specifically agreed by and between the parties that till the said Flat are transferred in the name of the Purchaser, the Purchaser shall not be liable to pay any maintenance charges in respect of the said Flat to the said Society and the same shall be borne by the Vendor.

    9. That the Vendor declares that his Membership of the said Society is subsisting and is in full force and has not been terminated.

    10. The Vendor has represented to the Purchaser that the total transfer fee / transfer premium / donation payable to the said Society for transfer of the said flat / said shares of the said society in the name of the Purchaser shall be borne and paid by both the parties in equal proportion.

    11. It is agreed between the Vendor and the Purchaser that the expenses for stamp duty on these presents or on final sale deed / transfer deed and registration charges in respect of this transfer shall be borne and paid by the Purchaser alone and the Vendor shall not be liable to pay the same or any part thereof. However, the stamp duty or duties in respect of all previous transfers in respect of the said flat shall be the responsibility of the Vendor.

    12. The Vendor doth hereby undertake to hand over all the documents including share certificate, receipts, papers concerning the said Flat to the Purchaser against the receipt of the balance consideration of Rs. _________/- (Rupees ________________________ only).

    13. The Vendor doth hereby undertake to do and to execute all acts, deeds, matters and things as and when it is necessary, proper or expedient for the purpose of fully and effectually transferring the said Flat and the said Shares of the said Society to and in favour of the Purchaser in the record of the said Society to enable the Purchaser to have and to hold the said Flat and the said Shares absolutely.

    SIGNED AND DELIVERED by the }

    withinnamed "Vendor" }

    Shri ________________ } ___________________

    in the presence of: }

    1. }

    2. }

    SIGNED AND DELIVERED by the }

    withinnamed "Purchaser" }

    Shri ____________ } __________________

    in the presence of: }

    1. }

    2. }

    Received of and from the withinnamed } Purchaser a sum of Rs. ________/- }

    (Rupees _____________ only) as } earnest money for the transfer/purchase } of

    the said Flat/said Shares. }

    WITNESSES                                                     I say Received





    1.                                                                                                           Vendor
    SCHEDULE OF PROPERTY

    ____________________________________________________________________________________

    5. Leave & Licence Agreement

    THIS AGREEMENT OF LEAVE & LICENCE is made and entered into at _______________(city) on the __ day of ______ Two Thousand and 0ne

    Between

    __________________,of _______________(city),Adult Indian Inhabitant, residing at __________________, hereinafter called the LICENSOR (Which expression unless be repugnant to the context or meaning thereof be deemed to include his heirs, executors, administrators and assigns) of the ONE PART.

    And

    ____________________, of _______________(city), an adult Indian Inhabitant, residing at _____________________, hereinafter called the LICENSEE (Which expression unless be repugnant to the context or meaning thereof be deemed to include his heirs, executors, administrators and assigns) of the OTHER PART; WHEREAS the LICENSOR is the exclusive owner and is seized and possessed of the ___________________________________________________, admeasuring about __________. hereinafter referred to as the 'SAID FLAT' for the sake of brevity's. AND WHEREAS THE LICENSEE has approached the licensor to give the said FLAT to the licensee on leave and license basis for a period of eleven months from ________ on terms and conditions hereinafter appearing; NOW THIS AGREEMENT WINESSETH AS UNDER

    COMMENCEMENT
    1. The parties of the First Part hereby state and declare that he has allowed the party of the other part to use the said FLAT premises with effect from ............(date) for a period of eleven months on Leave and Licence basis.

    PERIOD
    2. The party of the other part has agreed to occupy and use the said FLAT premises for a period of eleven months purely on leave and licence basis commencing on ..............(date) and expiring on ...........(date)

    DAMAGE BROKERAGE
    3. The Licensee shall keep the said FLAT in good condition and if any damages, breakages are caused to the said FLAT, the licensee shall make good the loss caused to the Licensor on account of such damages and breakages.

    COMPENSATION / RENT
    4. The Licence shall pay Rs............../- (Rupees................................) per month as compensation/rent for the use of the said FLAT premises on or before 10th of every month and if he fails to do so the owner has every right to cancel the agreement.

    5. The licensee shall keep the said FLAT premises in good conditions and shall not cause any nuisance and shall refrain from doing any act which might be objectionable to the owner or the neighbours and for this purpose the Licensor shall have right to enter and inspect the premises at any time suitable to him.

    6. The licensee shall not keep, permit or allow anyone else to use the said FLAT or grant licence to use and occupy or sublet nor shall transfer or assigns the benefits of this agreement to any other person.

    7. The licensee shall not carry any illegal business or activities nor shall store any prohibited articles or commodities which could cause damage to the FLAT premises and shall strictly observe the rules and regulation of the Society, Municipal corporation, Grampanchayat and Police Department.

    8. The licence shall be automatically terminated on completion of eleven months and immediately after that the licencee shall handover peaceful and vacant possession of said FLAT to the licensor.

    9. The Licensor shall have right to take possession of the flat on breach of any of the terms and conditions on the part of Licencee.

    10. The Licensors and the Licensee hereby covenant with each other that if either of the parties to this agreement decides to terminate the licence earlier than the date stipulated hereinabove, the desiring party of this agreement shall give one month notice in writing to the other party of such intention and accordingly the said agreement shall remain terminated on expiry of the notice period.

    RENEWAL
    and whereas the party is here to have an option to renew THIS AGREEMENT / AGREEMENT for further period..............months from the day of .....................to the........day of........, both days inclusive on the same terms and conditions of THIS AGREEMENT, except for this provision of further renewal, and provided the LICENSEE agrees to increase the MONTHLY LICENCE / COMPENSATION to Rs............../- ( Rupees....................only ) (TIME BEING THE ESSENCE OF THIS CONTRACT)

    11. That on completion of THIS AGREEMENT period or earlier termination thereof, as the case may be, as herein provided, the LICENCEE shall receive, from LICENSOR, collectively or either of them, the balance amount or complete amount of SECURITY DEPOSIT (as the case may be) after deductions of monthly COMPENSATION/LICENCE - FEE, if any due, as also all the arrears of charges due as per clause No.3 (three) hereinabove, and monetory loss, if any, suffered by the LICENSOR, by reason of the operation (by the LICENSEE) of THIS AGREEMENT OF LEAVE LICENCE, besides the loss in terms of money, suffered by the LICENSORS on account of damage to the PREMISES, and / or fittings/fixtures therein.

    12. That at all times, the OWNERSHIP and LEGAL POSSESSION AND OCCUPATION of the PORTION and the PREMISES shall be that of the LICENSOR, only and the LICENSEE shall use and occupy the PORTION as LICENSEE only, and shall not claim any interest of any nature whatsoever in the said PORTION or the PREMISES, and that nothing in THIS AGREEMENT shall be construed to be a demise at law in respect of the PORTION or the PREMISES or to confer the LICENSEE any right of tenency/sub-tenency/lease/sub-lease, etc., in respect of the PORTION or the PREMISES.

    13. That the LICENSEE shall, on expiry of the period of THIS AGREEMENT or the RENEWAL PERIOD, as the case may be or on earlier revocation, and /or vacation, of said premises, as herein provided, remove himself together with all his articles/things and hand over the occupation of the licensors, collectively or either of them, peacefully, and without any let/hindrance, in good order and condition normal wear and tear expected.

    14. That the LICENSORS and/or their respective authorized agent/s shall have the right to visit/enter the PREMISES for bonafide inspection purposes, at all reasonable times, between sunrise and sunset times, only.

    15. That the LICENSEE hereby confirm that the Premises shall be occupied by him (LICENSEE) on "AS-IS-WHERE-IS" basis, and that, therefore, any relevant laws/rules to the contrary notwithstanding, he (LICENSEE) shall not during the period of THIS LICENCE, or thereafter, demand or required by the LICENSORS any payment for any additions/alterations/repairs/renovations, of the PORTION or the PREMISES, which, if required by the LICENSEE, shall be carried out by the LICENSEE at his own cost, subject to obtaining prior permission from the LICENSORS, subject to the LICENSEE procuring required permission from the concerned SOCIETY and all other concerned authorities/institutions.

    16. That the LICENSEE doth hereby agree/undertake that he, his family members, staff, visitors, shall:
    (a) Take all reasonable care of, all and singular, the PORTION and the PREMISES, and shall indemnify the LICENSORS from and against any damage/loss (other than by ordinary wear and tear) by reason of normal use/occupation thereof, and he shall not do any other thing which may cause harm/damage to the PORTION of the PREMISES, and/or to the fixtures/fittings in the PORTION of and the PREMISES, and shall take proper care of the same as he would take in case of his own property and belongings, and shall always keep the PORTION and the PREMISES in a clean/habitable decent/sanitary condition, free from waste/rubbish.

    (b) Not do/cause/suffer to be done, any act/deed, or thing in or about the PORTION or the PREMISES which is illegal/improper/indecent/ immoral or which may expose the LICENSOR to any damage/loss/harm, due to any legal/Government /Society's action, or any action by the person/s so affected, and shall not disturb/injure/damage/remove/shift/displace/misplaced, or cause to be displaced/disturbed/injured/removed/shifted/misplaced, any of the fixtures/fittings provided in the PORTION/PREMISES.

    (c) Observe all the rules/regulations, now in force, or as may be imposed hereafter by the concerned SOCIETY/association/government/ Municipal authorities, in respect of his use/occupation of the PORTION, from time to time.

    17. That the LICENSEE hereby agrees to indemnify the LICENSOR and their representative, from all claims/demands/damages/actions/costs/charges, to which they may have to be held liable, by reason of any activity/negligence/commission/non-performance/non-observance, of any terms/conditions of THIS LICENCE, or otherwise, by the LICENSEE or any one acting under him.

    18. That THIS AGREEMENT shall be governed by
    (a) Indian Contract Act, 1882, and

    (b) the LICENSEE specifically agrees to be bound by the Bombay Rent Act, as at present in force, and shall not be affected to the prejudice of the LICENSORS by any change in the said provisions of relevant law (which might be adverse to the interest of the LICENSOR) viz. Section No 24 of the said RENT ACT, which reads as follows:

    s.24."(a) Not withstanding anything contained in this Act, a LICENSEE in possession or occupation of PREMISES give to him on LICENCE FOR RESIDENCE, shall deliver possession of such PREMISES to the LANDLORD on expiry of the period of LICENCE.

    "AND on the failure of the LICENSEE to so deliver the possession of the LICENCED PREMISES, a LANDLORD shall be entitled to recover possession of such PREMISES from a LICENCE, by making an application to the COMPETENT AUTHORITY.

    "AND THE COMPETENT AUTHORITY, on being satisfied that the period of LICENCE has expired, shall pass as order for eviction of the LICENSEE.

    "Any LICENSEE who does not deliver possession of the PREMISES to the LANDLORD on expiry of the period of LICENCE, and continues to be in possession of the LICENCED PREMISES, till he is dispossessed by the COMPETENT AUTHORITY, shall be liable to pay damages at double the rate of the LICENSEE - FEE or CHARGE of the PREMISES fixed under the AGREEMENT OF LICENCE.

    "THE COMPETENT AUTHORITY shall not entertain any claim of whatever nature from any other person who is not a LICENSEE according to the AGREEMENT OF LICENSEE.

    "Explanation - for the purpose of this SECTION
    a) The expression "LANDLORD" does not include a tenant, or a sub-tenant, who has given premises on LICENCE.

    (b) An AGREEMENT OF LICENCE in writing shall be conclusive evidence of the fact therein."

    19. That under the provision of the aforesaid clause No. (13)
    (a) (2) of the said RENT ACT, the said LICENSORS enhanced charge of Rs......../- (Rupees..............Only) per month, if he fails to vacate the PREMISES on or before the 30th day of ........., or the renewal period expiring on the 31st day of ................, as the case may be, and shall he also liable for prosecution under the aforesaid provision of the BOMBAY RENT ACT, 1947, at the cost and consequences of the said LICENSEE."

    IN WITNESS WHEREOF, THE PARTIES TO HAVE HEREUNTO SET AND SUBSCRIBED THEIR RESPECTIVE HANDS ON THE DAY AND THE YEAR FIRST HEREIN ABOVE WRITTEN,

    SIGNED,SEALED AND DELIVERED by ) ____________________________
    the within named "LICENSOR" )
    (a)_____________________ ) (LICENSOR)
    b) ______________ )
    in the presence of________ )  
    1. __________________ )  
    Name. ________________ )  
    Address._____________________ )  
    1. __________________ )  
    Name. ________________ )  
    Address._____________________ )  
     
    SIGNED,SEALED AND DELIVERED by ) ________________
    By the withinnamed "LICENSEE" )  
    In the presence of ) (LICENSEE)
    1._________________ )  
    2.________________ )  

    ____________________________________________________________________________________

    6. Conveyance Deed

    Note: This format has been prepared as applicable to flats. The word "flat" can be substituted with the type of property for which this document will be executed. Similarly, the name of the concerned authority can also be changed accordingly. For the sake of convenience, we have italicized such words.

    This conveyance made on this __________ day of __________ __________ __________ __________ __________ between President of India hereinafter called "The Vendor" (which expression shall unless excluded by or repugnant to the context be deemed to include his successors in office and assigns) of the one part and Shri/Smt./Kumari __________ daughter/wife/widow of Shri. __________ Resident of __________ __________ __________ __________ through his/her attorney Shri/Smt./Kumari __________ __________ son/daughter/wife/widow of Shri. __________ __________ __________ hereinafter called the "Allottee" (which expression shall unless excluded by or repugnant to the context be deemed to include his successors in office and assigns) of the second part and Shri/Smt./Kumari __________ daughter/wife/widow of Shri. __________ Resident of __________ __________ __________ __________ hereinafter called the "Purchaser" (which expression shall unless excluded by or repugnant to the context be deemed to include his successors in office and assigns) of the third part.

    WHEREAS the Allottee is a member of Co-Operative Society which was allotted land measuring __________ __________sq. mts.at __________ vide lease deed dtd. __________ and registered with the Sub-Registrar of Delhi as Document No. __________ in Book No. __________ Volume No. __________ at pages __________ to __________. WHEREAS vide Allotment letter No. __________ dated __________ Flat No. __________ Block No. __________ situated in __________ __________ __________ __________ (full particulars of the property may kindly be mentioned here) was allotted to the said allottee herein, subject to the limitation, terms and conditions mentioned therein.

    AND WHEREAS the allottee Shri/Smt./Kumari__________ Son/Daughter of __________ __________ Resident of __________ __________ has executed Power of Attorney on __________ appointing Shri/Smt./Kumari __________ __________ Son/Daughter of ___________________ _________ Resident of __________ __________ as his/her attorney authorizing him/her to sell the said property on his/her behalf. And Whereas the allottee had given the possession of the property to the purchaser and now the said property is in the possession of the purchaser.

    AND WHEREAS representing that the said allotment is still valid and subsisting the said allottee has applied to the vendor through his attorney for grant of reversionary interest of the vendor in the land underneath the flat allotted /leased/conveyed to him/her in favour of the purchaser and the vendor has agreed to convey the reversionary interest in the land underneath the demised property to the purchaser subject to the terms and conditions appearing hereinafter.

    NOW THIS INDENTURE WITNESSES THAT in consideration of the sum of Rs. __________ (Rupees __________ __________ __________ ) paid before the execution hereof (the receipt whereof the Vendor hereby admits and acknowledges) the aforesaid representation and subject to the limitation mentioned hereinafter the Vendor doth hereby grants, conveys, sells, releases and transfers, assigns and assures unto the aforesaid purchaser all his reversionary interest in the land underneath the said flat (full particulars of the said flat may kindly be mentioned here) (hereinafter referred to as the said property) more fully in the Schedule described hereunder together with all reminder, rents, issue and profits thereof TO HAVE AND TO HOLD the same unto the purchaser absolutely and forever subject to the exceptions, reservations, covenants and conditions hereafter contained that, is to say as follows:

    1. The Vendor expects and reserves unto himself all mines and minerals of whatever nature lying in or under the said property together with full liberty at all times for the Vendor, its agents and workmen, to enter upon all or any part of the property to search for, win, make, merchantable and carry away the said mines and minerals under or upon the said property or any adjoining lands of the Vendor and to lay down the surface of all or any part of the said property and any building under or hereafter to be erected thereon making fair compensation to the purchaser for damage done unto him thereby, subject to the payment of land revenue of other imposition payable or which may become lawfully payable in respect of said property and to all public rights or easement affecting the same.
    2. That notwithstanding execution of this deed, use of the property in contravention of the provisions of Master Plan/Zonal Development Plan/Layout Plan shall not be deemed to have been condoned in any manner and Delhi Development Authority shall be entitled to take appropriate action for contravention of Section 14 of Delhi Development Act or any other law for the time being in force.
    3. The purchaser shall comply with the building, drainage and other bye laws of the appropriate Municipal or other authorities for the time being in force.
    4. If it is discovered at any stage that this deed has been obtained by suppressions of any fact or by any mis-statement, misrepresentation or fraud, then this deed shall become void at the option of the vendor, which shall have the right to cancel this deed and forfeit the consideration paid by the purchaser. The decision of the vendor in this regard shall be final and binding upon the purchaser and shall not be called in question in any proceedings.

    It is further declared that as a result of this present purchaser from the date mentioned hereafter will become absolute owner in fee simple of the said property and the vendor doth hereby releases the Purchaser from all liability in respect of rent reserved by and the covenants and conditions contained in the said allotment letter required to be observed by the purchaser of the said demised property.

    The stamp duty and registration charges, upon this instrument shall be borne by the purchaser.

    The transfer shall be deemed to have come into force with effect from the date of registration of this deed.

    In witness whereof, Shri/Smt./Kumari __________, for and on behalf of and by the order and direction of the Vendor has hereunto set his hand and Shri/Smt./Kumari __________ Attorney of Allottee __________ _________ & Shri/Smt./Kumari __________ __________ the purchaser, have hereunto set their hand, day and year first above written.

    THE SCHEDULE ABOVE REFERRED TO:

    All that Flat No. __________ in Block No. __________ consisting of __________ __________ or thereabouts in the __________ __________ Co-Operative Group Housing Society bounded in the layout plan as follows:

    North __________________________

    East __________________________

    South __________________________

    West __________________________

    Signed by Shri. _____________________________________

    For and on behalf of and by the order and direction of President of India

    (Vendor)

    In the presence of

    Shri. __________________________

    Shri. __________________________

    Signed By Shri/Smt./Kumari __________________________

    (Attorney of the Allottee)

    In the presence of

    Shri. __________________________

    Shri.__________________________

    Signed By Shri/Smt./Kumari __________________________

    (Purchaser)

    ____________________________________________________________________________________

    16. FINANCIAL AND PROPERTY CALCULATORS

    F I N A N C I A L  C A L C U L A T O R S
    P R O P E R T Y  C A L C U L A T O R S

     

    EMI Calculator

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    Loan Remaining

    Tax Savings Calculator

    Total Cost of Loan Calculator

    Capital Gains Tax Calculator

     

    Equivalent Monthly Rent Calculator

    Rent Vs Buy Calculator

    Area convertor

     17. Fast and Vast Prosperity of Property in MYSORE 

    Mysore is soon stealing the gleam away from Bangalore. Mysore, Karnataka’s second largest city, is fast emerging as the IT destination after Bangalore. This rapid transformation in the city’s profile is mainly because of the surge in Mysore’s real estate segment.

    Even though Mysore, located just 140 km away, lagged behind Bangalore for about three decades in terms of industrialisation. The royal city could take on the state capital, as it scored better in offering good quality of life, population free atmosphere and lived up to its reputation of being a centre of education and knowledge. Mysore found a place among the top five tourist destinations in a survey conducted by the Union Tourism Ministry recently. The city had also been ranked among the top ten in a study conducted by a real estate consultancy Knight Frank, which puts the Mysore city on 9th among the 15 cities, considered as emerging growth centres in the country.

    The study was conducted on the basis of real estate, people, physical infrastructure and social environment with a conclusion that India's hottest emerging city is Chandigarh.

    Mysore was rated by all categories of respondents, as the least polluted and was ranked higher then other fast growing urban centres like Coimbatore, Indore, Kanpur, Surat, Lucknow, Visakhaptnam, Jaipur, Nagpur and Patna, a sub-registrar office in the city pointed out, explaining the reasons for the real estate boom in the city.

    The heritage city has suddenly become the cynosure of all eyes, with a flurry of activities being witnessed in infrastructure, housing, education and investments in highways and airport projects.

    Bangalore is currently facing space crunch. Property values in Bangalore are all time high. All these factors are driving away the IT and ITES companies from Bangalore. Meanwhile, Mysore’s infrastructure and real-estate profile has undergone a major transformation. Property development across Bangalore’s Outer Ring road (ORR) and the construction of Mysore-Bangalore highway has made Mysore more accessible. These transport corridors have made the inter-city connectivity more efficient. Hence, it has become easier for individual users and corporate offices to look for residential and commercial property options in Mysore, where property prices are comparatively less.

    Other features contributing to Mysore’s real estate development is up-gradation of airport, doubling of the Bangalore-Mysore railway track and upcoming expressway which will connect Mysore to other cities. Mysore‘s infrastructure is being beefed up especially to cater to the IT and related companies. IT companies are looking at localities like Hebbel industrial area, Metagalli and Vijaynagar to start operations. Many MNCs and other commercial industries are planning to shift their campus or establish their back office operations in the city.

    All these developments have impacted the property values in Mysore. The residential and commercial values have doubled in the past one year and are expected to grow further in near future. For example, property value for a plot measuring 2400 sq yard in Vijaynagar area was Rs 1.5 lakh in 2006. The same plot is being valued at Rs 5 lakh now.

    Mysore is emerging as Bangalore’s twin city. New industrial hubs have developed in the city and real estate transactions are on the rise.

    Now there are other reasons to know Mysore. With Bangalore growing faster than one ever fathomed, its traffic mess growing even more, Mysore has become the next favoured destination for companies. Many domestic IT companies have already started their campuses in Mysore, notable among them being Infosys [Get Quote].

    There is news that Accenture, IBM, Cognizant Technologies and Honeywell [Get Quote] too might extend their operations in Mysore. And wherever IT companies go they usually provide a push to other residential and retail sectors too.

    Mysore will also get heritage funding under the "Jawaharlal Nehru National Urban Renewal Mission". Alongside this, other infrastructural projects like the upgradation of the airport, doubling of the Bangalore-Mysore railway track and the brand new Outer Ring Road (ORR) will also help boost the city.

    The most significant though is the Bangalore-Mysore Infrastructure Corridor (BMIC) which includes an expressway. This will reduce the travelling time between the two cities (140 kilometres) to just 90 minutes.

    Land prices in Mysore have shot up significantly, says Anurag Mathur, deputy managing director, India, Cushman & Wakefield. The asking rate for land in Mysore city in the new ORR area is in the range of Rs 1,200-3,000 per sq ft (Rs 5.2 crore-13 crore per acre approximately) for converted land. In the outskirts (beyond ORR), it is in the range of Rs 70 lakhs-2 crore per acre.

    In comparison, a year ago, the rates were approximately half the present price range - within the city, prices varied between Rs 600-1,500 per sq ft (approximately Rs 2.6 crore-6.5 crore per acre) and in the outskirts between Rs 25 lakh-1 crore per acre. The BMIC is likely to further fuel growth in this market.

    "Mysore is seeing its first cycle of real estate which usually starts with residential, gets along retail, hotels and then commercial spaces," says Srinivas Anikipatti, regional director, Colliers International.

    What's with housing?

    The apartment concept is pretty new to Mysore, just as it is to most of our secondary cities. In Mysore, it started as late as 2005 but since then it seems to have caught up. Many local as well as outside developers have come in, notable of them being the Brigade Group, Sankalp, Mittal, Premier Properties, Puravankara Projects, Sobha Developers [Get Quote], says Knight Frank India. But there is still very little grade A residential space in the city. With these quality developers coming in that gap is sure to be bridged.

    Bangalore-based Puravankara Projects has got 8 acres of land in Mysore and is developing luxury homes at two other locations in the city. According to a source, the company is looking at acquiring more land because it sees a lot of potential in the city. And with the expressway coming up, it might even be looking at an integrated township here.

    The high-end residential areas in Mysore are Jayalakshmi Puram, V V Mohalla, Gokulam, Yadavgiri and Lalith Mahal Road while some of the upcoming ones are JP Nagar, Chamundi Hills, Siddhartha layout, Rajiv Nagar and Vijay Nagar.

    With the entry of regional and national developers it is expected that the city will witness more integrated and multi-storey projects. The expected increase in number of industries, IT/ITeS companies coupled with SEZ developments in the city, the floating population in the city is expected to grow manifold and thus the need for multi-storey residential projects, says Mathur.

    Sensing this, developers have already started developing residential apartment projects. Local developer Sankalp is doing the Sankalp Central Park with 1,500 apartments or approximately 1.3 million sq ft of residential space and a Rs 8 lakh sq ft Prozone mall.

    According to Cushman & Wakefield, approximately 600 units are expected to be complete by 2007 and about 2,000 units in the next 2-3 years.

    Knight Frank India tells us that in upcoming residential areas the current rate is between Rs 2,550-2,750 while prime areas rate is between Rs 3,000-3,500. These new projects are being sold to NRIs, Bangaloreans, and the new upcoming IT crowd in the city. The impact of BMIC, some say, might be such that in a few years there might be people staying in Mysore and working in Bangalore.

    On the residential front, the biggest push will be on the BMIC itself. BMIC is being developed by Nandi Infrastructure Corridor. According to Knight Frank India, the same company is planning to develop five townships spread over 2,000 acres along the expressway.

    The development will be in a phased manner and will take at least 7-8 years to complete. About 60 per cent of each of these townships will be residential while the rest of it will be commercial and retail. Along the same stretch, the Bangalore Metropolitan Region Development Authority (BMRDA) is also planning four new townships.

    Where will the new Mysore-wallah shop?

    At the moment there are no malls running in the city. All that the city has are traditional shopping complexes and streets. However, there are at least three decent sized malls under construction in Mysore - Prozone in Yadavgiri (8,00,000 sq ft); Habitat Shelters off Hunsur Road (3,00,000 sq ft) and Premier Properties.

    The list is longer when we look at the pipeline. According to Knight Frank India, in the pipeline are malls by Kshitij on 5 acres near Mysore Palace, Garuda on 2.5 acres on BM Road, Shobha Developers on 5 acres, Ideb on 1.85 acres and Valdel Unitech on one acre in Nazarbad. A majority of these malls are expected to be up and running by 2010 by which time there would be enough demand for retail space in the city.

    The current Bangalore-Mysore Road, which is close to the new expressway, is set to become a hub of retail activity for Mysore. There are 3-4 malls being planning on this stretch.

    Not too much demand for office space as yet

    The commercial space scene in the city is still at a nascent stage. Mysore already has some IT companies and some manufacturing facilities. To keep industries away from the city, the Karnataka Industrial Areas Development Board (KIADB) has created four different industrial areas.

    Most of the IT companies today have got land at the Mysore-Hebbal Industrial Area. Infosys is planning to further expand its campus on another 300 plus acres. Wipro [Get Quote] too is looking at expanding on over 200 acres and so is TCS [Get Quote]. Other large IT players include L&T Infotech and Software Paradyme India.

    Most of these domestic companies have developed built-to-suit office space in their campuses. Within the city, Brigade Group is developing a 28,000 sq ft office building, primarily to cater to banks and other smaller businesses.

    At the moment, in commercial, most developers are land banking at the moment. Nothing is taking off the ground but many grade A office space projects are expected to start in the next few months. Since the demand at the moment, for commercial space, is not that great, builders are looking for commitments from occupants before they start construction.

    The Mysore story looks very healthy right now. And with the father-like hand of Bangalore on its head (and if Bangalore's growth is anything to go by), it won't be long before Mysore too would catch up. Buy land in Mysore now when the rates are going only one way. Up.

    The 4 lane Hunsur Ring Road is drawing real estate developers for the investment potential it offers.

    Elysium is a plot development project in Mysore, close to the Knowledge Industry Corridor. 51 residential plots between 2400 sq. ft to 3200 sq.ft are on offer. Amulya Projects is also developing plots in a mega residential township off the Hunsur Road

    In addition, Amulya has exclusive residential layouts planned near the Satellite Township Ring Road, and near Chandrapura off Hosur Road. More centrally located, Mahaveer Nagar is a residential layout being developed by Mahaveer Developers

    Apartments by reputed builders Brigade and Puravankara are under construction. Brigade’s Elite 1 and 2 on KRS Road, Brigade Tiara in Yadavagiri, and Brigade Habitat, in Lakshmipuram are premium apartments that can be explored. The Brigade Splendour offering 4 BHK apartments is ready for possession.

    Puravankara’s 2 and 3 BHK apartments in Springtime located in Sreerampura are also open for booking, at a starting price of Rs.35 lakh.

    Retail is making inroads in the royal city with Euroamer Garuda Resorts investing Rs.40 crore into the Garuda Mall, Prozone tying up with the Rustomji group in Mysore, and the Makkaji mall being developed by Maverick Holdings. The Grand Mall covering 5.6 lakh sq. ft will cater to the upcoming residential layouts on the Hunsur Road

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    18.The top 10 Indian cities 

    August 19, 2006

    Business Today has a cover story ranking and profiling the top ten Indian cities, with a suitably humble tone.


    This is not how best cities are supposed to be. Best cities aren't supposed to erupt in violence if an ageing movie star dies at the grand age of 77, like Bangalore did when Rajkumar died on April 12. Neither are best cities supposed to let walk-in bombers massacre home-bound rail commuters like Mumbai allowed on July 11, when more than 200 people died. Best cities are supposed to be places where all their inhabitants can find material and spiritual fulfilment. The fact that none of India's cities is so, drives home a grim fact about our fifth Best Cities for Business survey: These are best of the worst cities. Power cuts, water scarcity, congested roads, pollution, dirt and roadside squalor are par for the course at almost all Indian cities.

    Yet, it is these overcrowded and crumbling cities that drive India and make it the second-fastest growing economy in the world. Cities and towns are where 30 per cent of our people live, with 38 per cent of the urban population confined to just the top 35 cities. Fifty-five per cent of the country's GDP emanates from urban India; 50 per cent of the foreign direct investment goes to the seven largest cities. Globally, cities are the engines of their economies. They are too in India.

    THE TOP 10 CITIES
    1 MUMBAI
    2 BANGALORE
    3 DELHI
    4 CHENNAI
    5 HYDERABAD
    6 KOLKATA
    7 PUNE
    8 AHMEDABAD
    9. MYSORE
    10 VIZAG

    Reference:-http://www.ventureintelligence.in/blog/2006/08/top-10-indian-cities.html

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